WEST PALM BEACH, FL (www.hedgeco.net) – US Department of Energy has cleared hedge funds and energy speculative traders of causing the recent crude oil price increases, which pushed the prices ofcrude oil above historical levels. Traditionally hedge funds are blamed for every problem in the markets, even when they are not a factor contributing to such problem. Recently crude oil pricesjumped to about $56/per barrel in the energy markets. The US information Administration revealed in its weekly bulletin that while the US inventory levels remain near its historical levels, increaseddemands for oil coming from both the United States and China has helped to push oil prices higher.
According to the bulletin, contrary to held views that hedge funds and speculative traders were responsible for bidding oil prices higher, hedge funds and traders were not the causes of such price increases. The analytical arm of the Energy Information Administration said, “The lack of both spare capacity and inventory cushions to cover potential surges in demand or disruptions in supply, in a strong demand environment, is the primary force behind currently high prices.” The bulletin added, “As such, EIA does not believe that hedge funds and speculator trading in energy are the main reasons why oil prices are higher now than they were a year or two ago.�
Crude oil for April delivery reportedly increased by $1.41to close at $56.46 a barrel on Wednesday. Such level is the highest price for crude oil ever recorded on the New York�s Mercantile Exchange since such instrument began trading at the Exchange in March 1983. Prices for the commodity skyrocketed following latest reports from EIA, which showed that the level of domestic gasoline inventory had dropped 2.9 million barrels to 221.4 million. Such drop was nearly three times more that market expectations.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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