Oil trade’s winners now reap the wrath

Investing in commodities has been a brilliant move in this decade — so brilliant that the strategy has attracted untold numbers of large and small players, particularly in the last few years.

What do you suppose all of their buying has done to the price of oil? Pushed it down?


With crude surging above $130 a barrel this week for the first time, a long-simmering issue is threatening to boil over: the role these new investors, often derided as rank speculators, have had in stoking the prices of oil and other commodities.

Their standard line has been, “It’s not our fault.” They point to rising demand for raw materials in China and other developing nations and to tight supplies as the main drivers of prices.

But at a Senate hearing Tuesday, a hedge fund manager named Michael Masters offered a different viewpoint.

He branded institutional investors such as pension funds as “one of if not the primary factors affecting commodities prices today.”

LA Times