I read a lot of articles about the price of oil and I have read quite a few lately that quoted some moron claiming the steep rise in the price of oil has had nothing to do with speculation. These morons claim that oil is trading solely on supply and demand fundamentals. That is absolutely absurd.

Last Friday oil had its biggest one day gain ever and oil gained more than sixteen dollars (over thirteen percent) in just two days. Was there some major supply disruption? Nope. The catalysts for this rise were a call by a Morgan Stanley analyst for $150 oil by July 4 and a threat made by Israel against Iran. If a pump by a brokerage firm and a threat of a supply disruption don’t scream speculation I don’t know what does.

I find it very disconcerting that Goldman Sachs and Morgan Stanley continue to pump oil futures. I read in an article the other day that both of these companies own large amounts of oil futures through their hedge funds. This makes Goldman Sachs and Morgan Stanley no better than a boiler room operation pumping penny stocks. (more…)