Expert: Alexander J. Hay - 10/27/2008

Question
Dear Sir:
I have been hearing lately that the exit of speculators is driving down the price of oil. As commodities are zero sum with selling short just as easy as buying long, is it possible that speculator short selling is causing the decline and not the "exit" of speculators?

Answer
I really question this issue of speculators causing everything. Speculators can drive the price up and down in the short term, but really what they do is speed up whatever is happening. We are in a recession, and the demand for oil in the future is going to go down. As such the price oil is going to go down unless there is a pull back in supply.