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Energy prices continue climbing

Oil & Gas Journal

"Since 2002 and the beginning of the boom in commodity prices, it has become increasingly fashionable to blame a large part of this rise on the speculative community," said Adam Sieminski, chief energy economist for Deutsche Bank, "While we agree that disconnects between price and underlying physical fundamentals can occur due to investor flows, we believe that such anomalies cannot persist for long and that underlying fundamentals remain the ultimate drivers of commodity prices, forward curves, and volatility."

Moreover, he said, "The rally in nonexchange traded commodity prices, such as molybdenum, cadmium, and ferrochrome, since the end of 2002 has been similar if not greater in magnitude than the rally in exchange traded commodities, such as crude oil and copper, where speculative inflows are possible." Sieminski said, "We believe this refutes the claim that speculators have been the primary drivers of rising commodity prices during this cycle. Rather it may be an indication of the increasing pricing power that resides with commodity producing companies and countries."