Quote:
Originally Posted by brundles
Is that the Oil futures investigation you're talking about? The idea that people who have agreed to pay a certain price for oil in the future are essentially scaremongering and manipulating the market in order to keep the market price higher thus guaranteeing them a profit. |
In just the same was as people jumped on the housing bandwagon to make money and in so doing forced prices up by increasing demand, buying commodities futures can be undertaken purely as a speculative venture and is common when demand is perceived to be on the move. The difference is that with futures trading there is often no intention of ever actually taking ownership of the product concerned just the expectation that those 'options to buy' will themselves increase in value and be able to be sold for a profit at some future point. It's just a form of gambling but many companies also engage in this activitiy as a means by which to try to insulate themselves from the effects of price increases.
I reckon futures trading has been having a significant effect on oil and other commodities prices for some time but there may be light at the end of the tunnel as economies slow and overall demand declines.
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