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“Even if we see significant short-run gains in global oil production capabilities, if demand from China and elsewhere returns to its previous rate of growth, it will not be too long before the same calculus that produced the oil price spike of 2007-08 will be back to haunt us again.”
- Dr. James D. Hamilton, Professor, University of California San Diego, Testimony before the U.S. Congress Joint Economic Committee (05.20.09)

“If speculation by long-only index funds did impact commodity futures prices, it is not evident in the empirical evidence available to date. Economic fundamentals, as usual, provide a better explanation for the movements in commodity prices.”
- Dr. Scott H. Irwin, University of Illinois (02.01.09)

“We take the view that all financial markets benefit from having a broad range of participants—providing the overall market remains fair and orderly. In particular, the involvement of a wide range of participants helps support the price formation process and deepens liquidity, which benefits all participants.”
- Memorandum from the Financial Services Authority (FSA) (07.2008)

“The Task Force has found that the activity of market participants often described as “speculators” has not resulted in systematic changes in price over the last five and a half years. On the contrary, most speculative traders typically alter their positions following price changes, suggesting that they are responding to new information – just as one would expect in an efficiently operating market.”
- Interagency Task Force, Interim Report on Crude Oil

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Welcome

  1. On November 10, 2009, the International Energy Agency published its World Energy Outlook (WEO) 2009. WEO 2009 examines the impact of the economic downturn on energy consumption, CO2 emissions and energy investment and what will be required at the UN climate conference in Copenhagen to reach an agreement that stops global temperatures rising at a price that is affordable. The WEO also focuses on the natural gas resource base, current trends and the role gas will play in the future energy mix.

    The WEO 2009 Executive Summary is available here and fact sheets are here.
  2. The U.S. Energy Information Administration (EIA) released its International Energy Outlook 2009 on May 10, 2009. In the report, it is noted that “Average world oil prices increased each year between 2003 and 2008. Spot prices reached $147 per barrel (in nominal dollars) in mid-July 2008, when they were well above the historical inflation-adjusted record price for a barrel of oil, which was set in the early 1980s. After reaching the July 2008 high mark, however, prices fell sharply. As the world’s economies recover, world oil prices are assumed to rebound and rise in real terms through 2030. In the IEO2009 reference case, the price of light sweet crude oil in the United States (in real 2007 dollars) rises from $61 per barrel in 2009 to $110 per barrel in 2015 and $130 per barrel in 2030. 


  3. The U.S. EIA also publishes weekly inventory reports. The weekly U.S. oil storage report can be found here and the weekly U.S. natural gas storage report can be found here.
  4. The International Energy Agency (IEA) issued its Medium-Term Oil Market Report on June 31, 2009. The report’s discussion on price formation notes that, “In short, the ‘speculation’ argument has been just as pronounced during the down-cycle and recent uptick as it was when oil prices were breaking record highs. The IEA has continued to monitor market developments both fundamental and non-fundamental factors and reiterate our opinion that price rises or falls tend to be multifaceted, rather than driven by a single cause.”1 The full EIA report is available via subscription only, but an overview presentation can be found here.

(1) Page 96, IEA Medium Term Oil Market Report