“The oil price can be thought of as a composite signal, resulting from a speculative signal superimposed over a fundamental signal. If we can determine the magnitude and sign of the speculative signal at each time, we can ascertain whether speculation was the main driver of the latest price rise or not.”
arraya, I have never claimed to be a mental giant, but this passage you just posted makes my head hurt! I think I got my signals transposed rather than superimposed…
Does the COT address the swaps & other derivatives that are directly related to the commodities futures? It sounds like there is a lot of activity going on with virtually no oversight.
And btw, I think you are right on the $$ about demand forever outstripping supply. As China, India, & other companies continue to develop & the foreign middle-class grows, demand will be out of control. Oil reserves are finite. It is definitely time to plan for our long-term energy future.
But I disagree that the current state of commodity speculation is irrelevant minutia. It is a current problem that if addressed directly could provide economic relief regarding energy prices & likely food prices as well.
