The Pitfalls of Oil Futures
As I found out by reading the below article, the price of crude oil today is not made according to any traditional relation of supply to demand, but instead is controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. A previous Senate report estimated that during June 2006, when oil traded near $60 a barrel, as much as 40% of its value was due to speculation markets. Due to the recent credit crunch and weakening of the dollar, which are pushing hedge funds and other investors into the energy market, that estimate could be increased to as much as 60%.
One may question where the oversight for such trading is? Due to key rule changes on how these oil futures can be traded, much of the oversight from the Commodity Futures Trading Trading Commission (the governing body for such trading) has been bypassed, allowing speculation to run amok.
If interested, you can read in greater detail over at Global Research.