Reply #14: Very interesting point...I haven't seen this mentioned anywhere else... [View All]

[lelgt60]

It's only logical, of course.

Do you know if there's any actual statistics on this? Since all futures contracts are bought on 10:1 or more margin, there's no way of knowing how much cash, if any, the speculators have backing that up. I know of people, for instance, who set their leverage at 2:1 (more like stocks). They only put up 10%, but they have 40% cash to back it up. But, as we know, that's not a requirement. Take that leverage and add to the fact that even the 10% could have been borrowed, and speculators could have huge purchasing capability.

However, if speculators know the source of their originating or backup funds was limited - that loans were no longer available - they might indeed curtail their activity. It doesn't take much to cause the demand side of the curve to go down significantly. I mean, of course, demand for futures - not demand for oil.