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Center for Energy Studies



Speculation, Fundamentals, and the Price of Crude Oil

Kenneth B. Medlock III

Speculation, Fundamentals, and the Price of Crude Oil.

The causes and consequences of rising oil price over the past decade has been the subject of much debate. The role of speculation in financial markets has come increasingly under the microscope with many economists arguing that in commodity markets, such as oil, inventory adjustment should prevent speculative pressures from unduly influencing price. This paper investigates whether speculative pressures can exert an influence on the price of storable commodities, such as crude oil and natural gas.