It would be a lot easier to blame speculators for inflating the price of oil if we had any idea who the heck the speculators were.
To that end, as part of its effort to increase transparency, the CFTC will start labelling oil traders as more than just “commerical” and “noncommercial” interests:
WSJ: The CFTC also plans to break swap dealers out of the commercial category and into their own group, while doing the same for hedge funds in the noncommercial section. Supporters said these moves will increase market transparency. Right now, the CFTC divides “commercial” traders, who use the market to reduce the risk that price swings pose to their regular business, from “noncommercials,” which are financial investors like hedge funds.
A major fuel consumer like an airline would be considered a commercial trader. But so would the airline’s swap dealer, often a bank, which helps the carrier use the oil market to stabilise jet-fuel costs, even though the dealer might also have a desk devoted to speculative trading. Some oil companies also have feet in both worlds, using knowledge gained from owning physical assets to place bets on the direction prices will take.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.