Newspaper article The Florida Times Union

Senator Takes Aim at Oil Price Speculators; Nelson Says Investors Create Inflation for Their Own Profit as Cited in Recent Report

Newspaper article The Florida Times Union

Senator Takes Aim at Oil Price Speculators; Nelson Says Investors Create Inflation for Their Own Profit as Cited in Recent Report

Article excerpt

Byline: KEVIN TURNER

Sen. Bill Nelson said he hopes that one of three bills on the U.S. Senate floor next week addressing expansion of U.S. oil drilling also will also reel in speculative investors he said are responsible for artificially inflating the prices of crude oil and gasoline for their own profit.

Nelson noted that a recent independent report demonstrates that speculative investment -- not oil supply or demand -- caused oil prices to rise drastically in recent years, topped by a spike from $95 in January to more than $145 in July before some speculative investments were yanked.

"This is just the latest in a series of reports that show oil traders and profiteers are the real culprits behind the shocking run up in gas prices," Nelson said Thursday. "Until Congress puts a stop to unfettered oil speculation, consumers will continue to suffer at the hands of greedy traders."

The report, prepared by Michael Masters of Masters Capital Management and Adam White, director of research for White Knight Research & Trading and released Wednesday, said congressional scrutiny into the practices of speculative investors in oil futures markets likely caused what they called a "mass stampede for the exits" from the S&P Goldman Sachs Commodity Index in mid-July.

A day after the first report, the Commodity Futures Trading Commission, the federal agency entrusted with ensuring the integrity of futures and options markets, released its own report that countered the first report's conclusions.

Masters and White maintain that when speculators pulled about $39 billion from the index starting July 15, it caused selling pressure that resulted in the sale of 127 million barrels of crude oil futures and a precipitous tumbling in price, by as much as $29 a barrel. According to The Associated Press, the per-barrel price of crude rose to the record $147.27 July 11, but by Sept. 7 had fallen $40 -- more than 27 percent.

That fall was a turnaround, Masters and White wrote, from the period between January and May, during which institutional investors poured $60 billion into commodity indices, causing buying pressure that drove up oil prices by about $33 per barrel. …

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