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If you read the article, these guys weren't just "speculators."
They were manipulating the market by altering the ACTUAL, REAL, PHYSICAL, UNDERLYING supply.
In order for their scheme to work, they had to consolidate and manipulate some of the actual phyiscal oil supply in a local market in order to incite a market sentiment of declining supply.
THEN, combined with futures positions, they were able to flood the newly elevated market (WITH THE ACTUAL SUPPLY) and collect on their futures short positions.
Without their ability to manipulate the actual spot/real commodity supply, they wouldn't have been able to manipulate the futures market.
Speculators cause volitility (and liquidity) in the markets, but I've said it time and again, speculation is driven from FUNDAMENTAL, real world phsyical supply and demand. It cannot sustain artificial highs or lows for long periods of time, as eventually, the real supply/demand balance pulls the price back to reality (essentially, it's not long before some speculators break ranks and push the trend back to reality).
I completely agree. I was just trying to point out that these guys weren't practicing what we would traditionally declare as "speculation." They were more manipulating than speculating.
But as you pointed out, I'm not sure they did anything "illegal." As you pointed out, if they could not conjure the required sell orders, they could have very easily gotten burned.
I'm all ears as to how we can use free market pressures to keep big money from replicating this supply manipulation.