Energy Environmental Blog

Speculation and Volatility

Written by Vorys | Mar 2, 2009 1:37:15 PM

A new study released by Informa Economics finds that it is impossible to assign a cause to the increased volatility experienced by commodity markets over the past several years.  "Perhaps increased participation by these groups [e.g., index traders and money managers] resulted in increased volatility.  Alternatively, higher volatility may have attracted money from these groups into these markets."  A copy of the study can be found here.

Interestingly, it notes that natural gas and crude oil markets showed much less evidence of increased volatility than grain contracts.