Rhody Trader

A hedge fund manager who records indicated has been long a bunch of airline stocks has done a study which, to his mind, puts the blame for the increase in oil prices squarely on speculators. I haven’t seen the actual report, and very much would like to do so. Based on the articles about it I’ve seen, I’m dubious.

One of the big reasons for my suspicions is that the numbers being quoted in terms of money flowing into and out of the market ($60 bln in during the first part of the year, $39 bln out since July) is based on futures market activity from the looks of it. By definition, the futures market requires a short for each long, so there were just as many sellers as buyers.

There’s also something about swaps, but that sounded like it was partly inclusive of clear hedgers.

It’s also worth noting that the trend in open interest in the crude oil futures market has been lower for the last year (granted with many ups and downs), and really started dropping off rapidly back in June.

Here’s the Bloomberg article.

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