After the announcement that oil would be released from strategic petroleum reserves around the world, there were pundits who expected the price of oil to fall (and it did for the next 24 hours or so). When the price of oil stabilized and then rose again, going above the price before the announcement, there were pundits who said that it was speculators driving the price back up.
But looking at the list, these were all refiners (or oil companies with refineries) looking for SPR oil.
With three exceptions: Barclays, JPMorgan, and Trafigura.
With those exceptions, I just don't include refiners buying oil from the SPR as speculators. If one does, then one must agree that anyone trading in oil are "speculators."
As for me, I don't use the word "speculator" to describe folks buying and selling commodities. In fact, I'm not even sure when I would use the word "speculator" -- it's all in the eye of the beholder.
Here are the generally accepted definitions of "to speculate":
- to engage in thought or reflection; meditate (often followed by on, upon, or a clause);
- to indulge in conjectural thought; and,
- to engage in any business transaction involving considerable risk or the chance of large gains, especially to buy and sell commodities, stocks, etc., in the expectation of a quick or very large profit.
So, I am flummoxed, again, by the pundits who are confused with the definition of "to speculate" when it comes to oil.
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