Friday, September 23, 2011

Speculators Driving Down Oil Prices

It is often claimed that speculators are driving up oil prices artificially. That is a possible scenario, yet it wasn't applicable to for example the recent run-up in oil prices. For speculators to increase oil prices paid by final users they must stock oil in physical inventories, something which they haven't done. Indeed, if you look at the numbers from the Energy Information Administration , it seems that speculation has been holding down prices. Crude oil and gasoline inventories are down by about 5.5% the latest year, while inventories of distillates (like diesel) and propane are down more than 10%.

09/16/11                 Week Year
Crude Oil   339.0    -7.3    -19.3
Gasoline    214.1      3.3    -12.0
Distillate    157.6    -0.9    -17.2
Propane       55.359  0.614 -8.361


Blogger Jim Lebeau said...

Hi, I enjoy your write very much and have convinced many to read what you write, because there is power in truth.

Today I wonder if you made a typo, when you wrote:
For speculators to drive down oil prices paid by final users they must stock oil
did you mean to say "up" instead of "down"?

Don't speculators contibute to the effiency of markets?



4:55 PM  
Blogger stefankarlsson said...

Yes, it was a typo. Thanks for pointing it out. I have now corrected it.

10:22 PM  

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