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Abstract:
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This paper is intended to better understand the effects of speculation on crude oil prices . While speculation has many benefits such as increasing market liquidity and bearing market risks that other wish to offset , speculation can also create unwanted market volatility and economic bubbles . During the past decade , crude oil prices have been extremely volatile causing increased controversy between investors and regulators regarding the role that oil speculation has played in the price of crude oil . This report examines the relationship between crude oil spot and futures prices to determine the role arbitragers , speculators , and hedgers have had in crude oil pricing . |