A few years ago, as commodity prices reached new records and heady heights on a daily basis, all the talk was of market speculation. I recall sitting on an Energy Risk panel in Houston and being asked about speculation and prices. My view at the time was that lots of money chasing long-biased strategies plainly had some impact on price formation but the reason that prices were spiraling ever upwards was about supply and demand. The discussion got a little raucous and made the front page of Gas Daily the following day. Now, several years later, as commodity prices generally continue to collapse, I hear nothing about the role of speculators. Instead, we read daily about China, the US oil boom and so on. In other words, when prices go up it’s all the fault of speculation but, when they come down, it’s about supply and demand? There can be little doubt that at times, the market got a little frothy as hedge funds, banks, family money and all kinds of other wealth management investors suddenly saw commodities as the place to be. The evidence of their activities was everywhere but I would suggest that 80% or more followed very
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