The Commodity Futures Trading Commission (CFTC) plans to issue a “revised” report on the role of speculation in the recently concluded oil price boom, reversing last year’s conclusion that such betting was not a major factor relative to underlying physical fundamentals. The CFTC’s interim report concluded last year that “current oil prices and the increase in oil prices between January 2003 and June 2008 are largely due to fundamental supply and demand factors.”
The reversal is said to reflect better data on who was actually in the market, including evidence that some traders had massive positions. But clearly the political bent of the leadership has changed as well, especially after the credit derivatives fiasco last year.
Political Risk As a Fundamental
Without question, commodity indices and other similar funds have allowed a lot of capital to flow into the market, and the fundamentals would not seem to justify prices reaching $147 per barrel.…