Speculators driving commodity market: TD Bank

Derek BurletonTD Bank senior economist Derek Burleton (left)casts his eye on surging commodity and crude oil prices and finds evidence that speculators may be driving the market at this point. [PDF version of Burleton’s report]:

“…improving fundamentals do not appear to be behind much of the most recent wave of buying. Indeed, inventories of base metals, while still low, have been grinding higher in recent months. In the case of crude, stocks have climbed to 8-year highs. Speculative activity appears to have taken the helm of late, spurred by either heightened geopolitical concerns (i.e., oil and gold) or merely cashing in on strong upward momentum (base metals).

Speculation, in the minds of most institutional and professional market watchers, is a bad thing because it tends to lead to the inevitable bursting of the bubble:

In light of the fact that the activities of speculators are erratic in nature, we are now even more steadfast in our view that a correction in crude oil and base metal prices in the order of 20% is in store for later this year.

 

One thought on “Speculators driving commodity market: TD Bank”

  1. I noted in your report David regarding oil prices peaking in the summer months. As a peaknik, I believe the oils supply for the world has peaked and we now rest upon a slowly sloping plateau headed in a downward direction in terms of supply while demand (as a result of China and India and usual 2-3% growth) increasing. Check on the website I included.
    cheers

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