Consumers drive oil prices, not traders - broker

07 May 2008 23:35  [Source: ICIS news]

NEW YORK (ICIS news)--Record high prices for oil are being driven by consumer demand and energy market speculators are not to blame, a trading company chief said on Wednesday.

 

Blaming high energy prices on speculators has become a “popular mass hallucination”, said Michael Cosgrove, president of Houston, Texas-based Amerex Brokers.

 

“Speculators do not meaningfully impact supply or demand of oil,” he told an energy outlook conference.  “There is no conspiracy.”

 

The prices of crude oil and other energy products are determined by producers and end users, Cosgrove said, with speculators only making money if their market projections are correct.

 

As long as demand increases, Cosgrove said, producers will sell at the best price they can, and speculators will still project price increases.

 

Speaking at a conference sponsored by New York City-based GFI Group, Cosgrove said that responsibility for high energy prices lies with consumers who continue to pay higher prices.

 

“If everyone stopped buying gasoline for a week, the price would go down,” he noted.

 

It is irrelevant to speculators what the price of oil is, as long as their transactions are profitable, said Cosgrove.

 

“Speculators do not care if prices go up or down. They just want to make money,” he said.

 

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By: Ivan Lerner
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