Before You Blame Speculators for Oil ETF Moves…Could You Be One?

July 17th at 6:00am by Tom Lydon

images Oil prices are nowhere near steady, and investors are perplexed as they try to figure out why. Analysts believe that there is one thing that is creating these gyrations in shares prices and exchange traded funds (ETFs): the dreaded speculator. But before you get out your torches…could you be one, too?

What’s behind the wild gyrations in oil prices? Market watchers believe it is the investors themselves, the so-called speculators. But are speculators actually market manipulators? Dan Rice, manager of the Blackrock Energy and Resources Fund on Yahoo Finance says speculators do play a big role in the market, and that speculation gives the markets liquidity.

L. Gordon Crovitz for The Wall Street Journal reports in an opinion piece that short sellers last year were blamed for their trades warning about the credit crisis, and commodities traders are now accused of causing higher oil prices. The fact remains that even when traders are proven right, they still get blamed for bringing the bad news.

A recent proposal aimed at one group of speculators could prove that speculators of all kinds deserve our thanks. If that seems too far out, at least they are rewarded for bringing valuable information to markets.

Protect yourself from wild swings in the markets with a trend following discipline and an exit strategy.

  • United States Oil (USO): up 1.4% year-to-date

  • PowerShares DB Oil (DBO): up 22.4% year-to-date


For more stories about oil, visit our commodity category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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