• 1 hour Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 3 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 4 hours Venezuela Officially In Default
  • 6 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 8 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 14 hours Saudi Oil Minister: Markets Will Not Rebalance By March
  • 19 hours Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 23 hours Rosneft Announces Completion Of World’s Longest Well
  • 1 day Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 1 day Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 1 day Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 1 day Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 2 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 2 days Russian Hackers Target British Energy Industry
  • 2 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 2 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 2 days Lower Oil Prices Benefit European Refiners
  • 2 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 3 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 3 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 3 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 3 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 3 days OPEC To Recruit New Members To Fight Market Imbalance
  • 3 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 4 days GE Considers Selling Baker Hughes Assets
  • 4 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 4 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 4 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 4 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 4 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 7 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 7 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 7 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
  • 7 days Kenya Set To Give Local Communities Greater Share Of Oil Revenues
  • 7 days Rosneft, China To Deepen Strategic Cooperation
Alt Text

Is OPEC Deal Compliance About To Crash?

OPEC’s victory lap to celebrate…

Alt Text

Why Oil Prices Will Keep Moving Up

With oil smashing through two-year…

Alt Text

Oil Prices Nosedive On Bearish IEA Report

Oil prices are cratering after…

Speculation Affects Oil Prices but New CFTC Limits May Not Stop It, Survey Finds

Speculation Affects Oil Prices but New CFTC Limits May Not Stop It, Survey Finds

Almost three-quarters of top oil industry participants surveyed by Reuters feel that financial speculation contributes to oil price volatility, but many of them think new regulations to curb speculation may not be effective.

Some 73% of the 40 oil industry participants, including analysts and traders, said that speculation results in higher oil prices and was partly responsible for crude prices rocketing to $150 a barrel in 2008.

The question of whether supply and demand alone are the main determinants of oil prices has been debated in the wake of the 2008 increase. In the Reuters survey, participants estimated that speculation added $10 to $30 a barrel to oil prices, leading the news agency to calculate that even on the basis of the lower estimate speculation was costing $300 billion a year.

The Commodity Futures Trading Commission, which is responsible for regulating energy futures, said at the time that fundamentals were driving the market, but the new CFTC chairman, Gary Gensler, has said that it’s clear speculation plays some role.

He has proposed position limits on energy trades as a way of curbing that speculation. But nearly a quarter of those surveyed by Reuters said the limits do not go far enough, and 35% worried that they might do more harm than good.

Nearly two-thirds of those surveyed favored regulation, but only two-fifths thought the rules as proposed would effectively limit speculation.

Comment letters on the CFTC proposal show a similar divide, with non-financial end-users welcoming the restrictions and financial participants defending their role in creating liquidity and improving price discovery while arguing there has been no firm evidence that speculation creates any distortion in prices.

The Intercontinental Exchange, which offers over-the-counter energy contracts, noted that price spikes occurred in 2008 in commodities that have no futures markets with financial speculation. Curbing speculative activity and reducing liquidity could lead to increased price volatility and distortion of price signals, ICE asserted.

But industry users such as the Air Transport Association have argued that increased targeted investment in energy futures has driven the greater volatility in oil prices, which have been “devastating” for the aviation industry.

By. Darrell Delamaide




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News