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Jim Rogers doubts futures trading adding to crude oil surge

The investment guru says he is doubtful whether futures trading and over-the-counter trading is contributing to crude surge since prices are higher in the physical market than in the futures.

business Updated: Jul 15, 2008 22:13 IST

Expressing doubt over the widely held perception that speculation in futures is contributing a steep surge in crude oil prices, world’s top commodities investment guru Jim Rogers has said prices are higher in the physical market than in the forward market.

“I am doubtful whether futures trading and over-the-counter trading is contributing to crude surge since prices are higher in the physical market than in the futures,” Rogers told PTI in an e-mailed interview.

According to energy experts, the difference in price rise in physical and futures market is estimated to be less than one per cent.

Crude oil prices have risen by about $47 since January. Currently on New York Mercantile Exchange, oil traded near record high levels over $145.

At Energy Ministers Meet in Jeddah, Saudi Arabia last month, the Finance Minister P Chidambaram had attributed sharp rise in global crude oil prices to unregulated over- the-counter markets and futures trading in oil.

“How is that oil prices were $70 a barrel in August 2007 and how is it that they have doubled when there has been no dramatic change in demand? The causes for the current pandemonium in oil prices lie elsewhere: in unregulated over- the-counter markets and futures trading in oil,” Chidambaram had said.

Asked if crude oil prices would moderate in near future, Rogers said, “Yes”, and suggested that “all countries should eliminate price controls on energy to address price rise issue.” In order to contain prices, "OPEC cannot increase supply", he noted.

Although rising crude oil prices is playing havoc on economies, Rogers believes, “The world economic growth is more affected by the crisis in America.”

He further said that it is "extremely good" if the alternative energy is explored to tackle the problem.

On Indo-US civil nuclear deal, he said, "I presume it will happen. In terms of energy, the world needs more nuclear power. It is cheaper and cleaner and can be controlled.”