Dan Dicker, energy guru over on the street.com, explains why crude oil and natural gas could be reaching record highs soon enough. Usually, I will give my thoughts on the matter but, Dicker says it all below. I have been very bullish on oil and other commodities but, this concerns me for our economy. This is very concerning to me since I care about our economic recovery yet, great for commodity-related stocks.
Dicker explains:
In my upcoming book, Oil’s Endless Bid, due out from John Wiley & Sons in March, I argue that financial influences from investors and traders and the massive growth of derivatives markets have been the single most important factor for oil’s high and unreliable price, far outstripping fundamental arguments of emerging market growth, peak oil or any other supply constraints or a devaluing dollar.
And further states:
Putting some controls on at least some of these speculative influences was supposed to be one of the goals of Dodd-Frank, but the actual rule-making to put teeth behind the legislation has been left to the Commodity Futures Trading Commission (CFTC). Since it began tackling this massive job in July 2010, the CFTC has literally been uried by the pushback from industry lobbyists, hired-gun lawyers, derivatives broker/dealers and virtually every industrial corporation with a trading desk that depends even marginally on derivatives activity to protect or augment profits.
Read the rest of the article here. Record Oil, Gas Prices Loom as Financial Reform Fails
