Friday, June 13, 2008

Are Futures Traders to Blame for High Oil Prices?

The president of the Futures Industry Association, John Damgard, answers that question in this FT.com video.

3 Comments:

At 6/13/2008 7:51 AM, Anonymous E. Harokopos said...

He claims no manipulation, yet he admits that hedge funds and pension funds drove the price up. This is called contradiction.

The fundamental issue is defining what manipulation means.

Also, defining passive and active manipulation.

IMO, buying oil futures to benefit from price momentum is passive manipulation if looked accross the board.

It's time to terminate oil futures trading in exchange for a more efficient system of forward agreements between producers and end users.

That will drive speculators out and could drop prices substantially.

Of course, exchanges will resist. Who cares...

 
At 6/13/2008 11:12 AM, Blogger KauaiMark said...

How about increasing the margin requirements for commodity speculators to something like 50%

Putting up "real" money might slow the gamblers a tad

 
At 6/13/2008 11:58 AM, Anonymous E. Harokopos said...

"Putting up "real" money might slow the gamblers a tad"

Funds have no problem with money and can borrow up to 10:1 or more.

Margin is nto a problem for speculators. Increasing margin to 50% will drive out small time intraday traders or what is known as "noise traders" who do not affect price momenutm because they stay flat after market close.

The sooner they shut down oil futures, the better will be for the world because every month a new equilibrium level is set.

 

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