Responding to news that the Commodity Futures Trading Commission, the watchdog for U.S. commodity transactions, was investigating for possible oil price manipulation, legendary oil investor T. Boone Pickens, Jr., said in interviews yesterday at an American Wind Energy Association conference in Houston that:

There’s nothing to it to start with. That’s not what’s happened. You have 85 million barrels a day of oil available in the global energy market and 86.4 million barrels a day of demand. So the price of oil is going to go up until you can kill demand.

The CFTC’s actions can be attributed to “trying to find a scapegoat and place blame for it when what you have is demand that is greater than supply,” according to Pickens. The famous oilman explained:

You’ve got to have a commodity market, because a producer has to have an opportunity to hedge when they feel like the risk is becoming too great for them. For every hedger, you have to have a speculator.

On Monday, the founder and chairman of Dallas-based BP Capital LLC confirmed his earlier forecast that crude oil will reach $150 a barrel this year. He said:

We’re using 400,000 barrels of oil less today than we did a year ago, but the Chinese are now using 500,000 barrels greater than they did last year. So whatever we kill in the way of demand, they pick up in their demand. You’re gong to bid for the oil, and the highest bidder’s going to get the oil until you finally kill demand with price.

Source:

“Pickens Says CFTC Probe of Oil a ‘Waste of Time’ (Update1)”
Margot Habiby, Edward Klump
Bloomberg, June 3, 2008

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