Examining the Role of Financial Investors and Speculation in Oil Markets

Posted: 22 May 2019

See all articles by Axel Pierru

Axel Pierru

King Abdullah Petroleum Studies and Research Center (KAPSARC)

Denis Babusiaux

Institut Francais du Petrole (IFP)

Lasserre Frederic

affiliation not provided to SSRN

Date Written: May 1, 2011

Abstract

Repeated oil price spikes have generated a great deal of controversy about the role played by speculation in derivatives markets. A number of analysts have suggested that the speculative positions of financial investors played a major part in the 2008 oil-price hike. In contrast, some economists claim that oil inventories did not increase sufficiently for speculation to be the cause of the run up in oil prices. We present these two apparently contradictory arguments and attempt to reconcile them by emphasizing the inertia of the world-oil-demand response to price variations. The existence of market's focal points is also analyzed.

Keywords: specualtion, oil, inventories

Suggested Citation

Pierru, Axel and Babusiaux, Denis and Frederic, Lasserre, Examining the Role of Financial Investors and Speculation in Oil Markets (May 1, 2011). Journal of Alternative Investments, Vol. 14, No. 1, 2011, https://doi.org/10.3905/jai.2011.14.1.061 , Available at SSRN: https://ssrn.com/abstract=1912590

Axel Pierru

King Abdullah Petroleum Studies and Research Center (KAPSARC) ( email )

Riyadh, Central Province
Saudi Arabia

HOME PAGE: http://www.kapsarc.org/

Denis Babusiaux (Contact Author)

Institut Francais du Petrole (IFP) ( email )

228 Avenue Napoleon Bonaparte
Rueil Malmaison 92852
France
33147526280 (Phone)
33147527066 (Fax)

Lasserre Frederic

affiliation not provided to SSRN ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
833
PlumX Metrics