Under reasonable conditions long positions in oil future contracts cannot lead to higher spot prices. Oil spot prices are determined by supply and demand of the physical product. Open positions in oil futures are generally closed before the expiration of the contracts and there is not a large physical delivery linked to the future contracts. Futures are used by speculator to bet on the direction of the underlying spot commodity and generally do not imply big physical exchanges of the physical oil. Putting restrictions on oil futures trading will not solve the problem but is likely to make people worse off as producers and consumers (refineries, air companies,…) might not be able to use futures as a hedging vehicle and everyone would be worse off. Pirrong extends further on this argument.

One thing that is clear to many is that manipulation of oil prices needs dealing with the physical commodity. Hoarding enough oil might push prices higher as it induces a shortage in its supply. What is extracted is hoarded and does not reach the final market. This process is limited by the hoarding availability of speculators. Oil is not easily storable. Shortage of supply could also be induced by producers not pumping enough oil. But this is a different issue, this is more related with the well management of a price cartel agreement, the OPEC.