A report to Congress by the Commodities Futures Trading Commission did not support the common notion that speculators were the cause of the spike in oil prices this year. Seems like it is supply and demand as the primary market forces in their view.
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The Coalition to Protect Competitive Markets said today that the Commodity Futures Trading Commission's (CFTC) new report on swap dealers and index traders supports the growing consensus of economic thought that the forces of supply and demand, not investors, are responsible for the run-up in oil and gas prices.
Specifically, the CFTC's report, which is based on an unprecedented collection of data from commodity traders, found that as crude oil prices were increasing -- from December 31, 2007 to June 30, 2008 -- the activity of commodity index traders in the oil futures actually declined.
"The CFTC report refutes the notion that investor participation in the commodity markets has caused the rise in oil prices," said Richard H. Baker, President and CEO of Managed Funds Association and a spokesman for the coalition. "During the period when oil prices were rising, investment activity in the oil futures markets was declining. This fact undermines the political rhetoric about investors and their impact on energy prices. It's time for Congress to move forward with a comprehensive energy plan that deals with the supply and demand issues that are behind high oil and gas prices."
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http://www.marketwatch.com/news/story/cftc-report-undercuts-claim-investors/story.aspx?guid={06B5DBFD-CC90-41A2-A3C0-6F18A3DBC03A}&dist=hppr