"Saudi Arabia will press consumer nations at an oil meeting in Jeddah this week to take action to curtail the speculation it sees as a major factor behind high oil prices, a newspaper reported on Saturday.
"Governments have a role in organising (oil) markets and structuring them in a way that prevents speculators behaving in a manner that has led oil prices to reach their current levels," Deputy Oil Minister Prince Abdulaziz bin Salman was quoted as saying in the Saudi-owned Asharq al-Awsat daily.
The prince was discussing a paper Saudi Arabia will present to an unprecedented meeting of consumer and producer countries in Jeddah on Sunday. He said the Saudi paper had been prepared in coordination with the oil producer cartel OPEC. " Reuters
We are about to enter a period in which a major lesson will be taught to the world regarding the fact that market prices are more a product of mass perception and a form of hysteria than they are of "hard data."
Greed feeds greed. Prices in oil have been rising because there was money to be made in the atmosphere of "casino" gambling fostered by the impatience of the young and ruthless adventurers who dominate the derivatives markets.
In the "make or break" games that are played in those markets perception is more important than reality. The impressions made on each other by "players" at lunch in restaurants where the amount of the check would feed families for weeks or months in the developing world are more important than any statistics on supply and demand.
The US government has now focused on the men in mega suits from Italy. Some have been indicted, others will walk the "perp" walk in a process of reduction of the the risk of unrest that has been the unintended effect of the functioning of unrestrained commodity futures markets.
The Saudis are going to lend a hand in that process this weekend. The amount of the increase in their production is not significant as an incremental rise in the world’s oil supply. Its significance lies in their stated intent to cripple the process of parasitic speculation in a vital commodity. pl