Kurt Ullman wrote in
m:

In article ,
"Robert Green" wrote:


commodities markets went from $13 billion to $300 billion. Last year,
27 barrels of crude were being traded every day on the New York
Mercantile Exchange for every one barrel of oil that was actually
being consumed in the United States. source:

http://www.cbsnews.com/2100-18560_162-4707770.html

Since oil is fungible and a world-wide market, this is a bogus
stat.
The REALLY interesting one would how many are traded worldwide versus
how many are use worldwide.

I had to look up fungible, and I'm not sure I fully understand anything
more than a version of "easily substituted". Statistics are always
suspect, since we usually don't know all the premises and limitations to
the calculations. But bogus is too strong a word, IMO.

Nevertheless, since the US share of the world oil market is in the order
of 25%, substantially more than the ~4% as the 27-fold multiple of trades
over uses of 1 barrel suggests, the much repeated selling of that same
barrel of oil seems excessive. In the aggregate and on average such
trading cannot possibly reduce the average price of oil, since every
trade costs something.

So, yes the trading functions a bit to hedge and keep the prices in a
free market range, but that range is increased by the speculation.

--
Best regards
Han
email address is invalid