Black Gold & Fool’s Gold: Speculation in the Oil Futures Market
This paper addresses the question of whether the oil price spike of 2003-2008 was a bubble. We document and discuss what is known about the level of speculation in the paper oil market. We then analyze the dynamics of the term structure of futures prices, both during the earlier period of 1985-2002...
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| Format: | Working Paper |
| Language: | en_US |
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MIT Center for Energy and Environmental Policy Research
2010
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| Online Access: | http://hdl.handle.net/1721.1/51711 |
| _version_ | 1826211363167404032 |
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| author | Parsons, John E. |
| author_facet | Parsons, John E. |
| author_sort | Parsons, John E. |
| collection | MIT |
| description | This paper addresses the question of whether the oil price spike of 2003-2008 was a bubble. We document and discuss what is known about the level of speculation in the paper oil market. We then analyze the dynamics of the term structure of futures prices, both during the earlier period of 1985-2002 and during the spike. The dynamics of the term structure changed in important ways during this latter period, and we explain how this may have contributed to generating a bubble. We also explain how this answers the puzzle of the lack of accumulating above-ground inventories. Finally, we discuss the implications for regulatory reform of the paper oil markets. |
| first_indexed | 2024-09-23T15:04:42Z |
| format | Working Paper |
| id | mit-1721.1/51711 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T15:04:42Z |
| publishDate | 2010 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/517112019-04-12T23:36:00Z Black Gold & Fool’s Gold: Speculation in the Oil Futures Market Parsons, John E. This paper addresses the question of whether the oil price spike of 2003-2008 was a bubble. We document and discuss what is known about the level of speculation in the paper oil market. We then analyze the dynamics of the term structure of futures prices, both during the earlier period of 1985-2002 and during the spike. The dynamics of the term structure changed in important ways during this latter period, and we explain how this may have contributed to generating a bubble. We also explain how this answers the puzzle of the lack of accumulating above-ground inventories. Finally, we discuss the implications for regulatory reform of the paper oil markets. Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. 2010-02-11T17:24:27Z 2010-02-11T17:24:27Z 2009-09 Working Paper 2009-013 http://hdl.handle.net/1721.1/51711 en_US MIT-CEEPR (Series);2009-013 application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Parsons, John E. Black Gold & Fool’s Gold: Speculation in the Oil Futures Market |
| title | Black Gold & Fool’s Gold: Speculation in the Oil Futures Market |
| title_full | Black Gold & Fool’s Gold: Speculation in the Oil Futures Market |
| title_fullStr | Black Gold & Fool’s Gold: Speculation in the Oil Futures Market |
| title_full_unstemmed | Black Gold & Fool’s Gold: Speculation in the Oil Futures Market |
| title_short | Black Gold & Fool’s Gold: Speculation in the Oil Futures Market |
| title_sort | black gold fool s gold speculation in the oil futures market |
| url | http://hdl.handle.net/1721.1/51711 |
| work_keys_str_mv | AT parsonsjohne blackgoldfoolsgoldspeculationintheoilfuturesmarket |