The Tail That Wags The Oil Price Dogs

…how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks, such as Goldman Sachs or Morgan Stanley, have any idea who is buying and who is selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil”.

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left the Organization of the Petroleum Exporting Countries (OPEC) and gone to Wall Street. It is a classic case of the “tail that wags the dog”.

http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html