Speculators in the spotlight once more

19/06/2009

The recent price surge in crude prices and other distillates such as heating oil have brought commodities speculators under the cautious glare of politicians, the Economist reports.

Although whispered talk of the green shoots emerging, officials are growing increasingly concerned that the rising price of oil could thwart an early economic recovery, with many still mindful of the misery brought by the record fuel prices seen in the summer of last year.

Crude oil prices hit a record $147 a barrel on July 11th, while wholesale heating oil prices also rose above $4 a gallon during the summer, with many analysts laying the blame at the door of commodities traders.

However, the Economist reports that measuring the effect that speculators have on crude prices and other commodities such as heating oil can be a tricky business.

It explains that while bullish speculators may hoard crude on bets that prices will rise, "they will only make money in the long run if the fundamentals of supply and demand bear them out. If not, they will be tossed about just as badly as everyone else."