“If regulators really wanted to limit speculation in the oil market, they should keep the shorter-term futures contracts and eliminate the more speculative six-month futures contracts.”
That’s the conclusion of a recent paper by Lonnie Stevans and David Sessions of the Frank G. Zarb School of Business, who also found that:
“For model specifications with short-term futures contracts, supply does indeed dominate price movements in the crude oil market. However, for specifications including longer-term contracts that are inherently more speculative, the real price of oil appears to be determined predominantly by the futures price....MORE
Wednesday, August 13, 2008
Much ado about oil speculation
From FT Alphaville: