On Monday, September 22nd crude oil prices saw their biggest one-day surge ever. The sudden price surge called federal regulators to subpoena the records of several Wall Street traders.

“The jump immediately caused analysts and traders to suspect that one or more traders holding short positions — bets that oil prices would fall — were scrambling to cover their bets in a rising market,” The Times reported.

Phil Flynn, Alaron Trading’s energy expert, agreed and said that the surge was a “classic squeeze play” and could have been caused by several traders who were caught off guard by the rising prices.

“My concern is this gives more impetus to the (theory that) speculators are driving the oil price among people who don’t understand how markets work,” Flynn said.

But what really drives the price of oil? I found some interesting tidbits from author F. William Engdahl at www.globalresearch.ca. Engdahl says that the control of oil prices has left OPEC and has gone to Wall Street.

“As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price.”

But how?

Engdahl writes that today’s oil prices are really determined by a process so opaque that only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in the new world of “paper oil.”

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices. Check out his explanation at the link below.

Does anyone else have any ideas about what really drives the price of oil? See this article. It will make you feel smarter just by reading it!!

(Find F. William Engdahl’s article here: http://www.globalresearch.ca/index.php?context=va&aid=8878)