Report shows no evidence of speculation in the US oil futures markets
The level of outright position-taking in US exchange-traded oil derivatives contracts has largely fluctuated in a normal range based on historically relevant benchmarks, according to a report by Edhec Risk.
Because many aspects of the global oil markets have not been sufficiently transparent, it was unclear how much of the oil-price rally that peaked in July 2008 could be put down to speculation.
This uncertainty has led to concerns that there was excessive speculation in the oil derivatives markets.
On 20 October 2009, the US Commodity Futures Trading Commission released three years of enhanced market-participant data for 22 commodity futures markets in its new Disaggregated Commitments of Traders report.
With this report, Hilary Till, research associate with the Edhec-Risk Institute, was able to examine whether the balance of outright position-taking in the exchange-traded oil derivatives markets has been excessive relative to hedging demand during the past three years.
The paper finds that using a traditional metric for evaluating speculative participation, the level of outright position-taking in US exchange-traded oil derivatives contracts has largely fluctuated in a normal range based on historically relevant benchmarks.
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