Fundamental supply and demand forces provide the best explanation for recent crude oil price increases, concluded a staff report for the Interagency Task Force on Commodity Markets.
“If a group of market participants has systematically driven prices, detailed daily position data should show that [the] group’s position changes preceded price changes. The taskforce’s preliminary analysis, based on the evidence available to date, suggests that changes in futures market participation by speculators have not systematically preceded price changes,” the report said in its executive summary.
“On the contrary, most speculative traders typically alter their positions following price changes, just as one would expect in an efficiently operating market,” it added.
The US Commodity Futures Trading Commission formed the taskforce in June with representatives from the Departments of Agriculture, Energy, and the Treasury, the Federal Reserve’s Board of Governors, the Federal Trade Commission, and the Securities and Exchange Commission. It issued a 45-page interim report limited to the crude oil market on July 22 because the issue of high oil prices is so important and timely, the CFTC said.
“The recent upward surge in the price of crude oil has significantly affected American consumers and businesses. This staff report reflects the collective knowledge of some of our governments’ best economists,” said the taskforce’s chairman, CFTC Chief Economist Jeffrey Harris.
“Each of the participating agencies brings unique expertise to the taskforce, and this interim report, for the first time, attempts to compile the government’s best available information and analysis into one report. We hope that it will serve as a useful resource concerning the crude oil market and will contribute to the public discussion of important energy issues,” he said.
The taskforce will continue to evaluate commodity market conditions and will report on its additional work later this year, Harris said.
