So, you have a the refineries and other buyers of crude oil on one side and the oil companies or oil exporting countries on the other. When they talk about speculators, I assume they are talking about the futures. I'd like to know precisely the explanation from someone who has that viewpoint how they could affect that price? I can only imagine it is offer and demand since if there was too much oil, prices would go down, if there was not enough, prices would go up. Speculators needs to buy a futures contract (long) or sell one (short) to enter the market. But at the end of the month, when delivery is to occur, they have to liquididate their position so it becomes neutral. If there are more buyers (refineries etc) of crude oil than there are sellers, high prices will be justified and go even higher. If on the other hand, there is not enough buyers, those speculators will be stock with their contract and need to sell them at a cheaper price (because they don't want a delivery).
Tags: