The real Oil Speculators.

Over the last 3 weeks, I have been racking my head over who is buying oil at 125+. Surely the Chinese and Americans do not want it this high-I doubt they have been chasing especially given the demand destruction over the last month or two. How about the Saudis? Not likely. Maybe the Russians? More possible but also unlikely as they are happy cranking out 100$ bills for every barrel. Then maybe this is a forced buyin-ie a massive margin call on some of the 'shadow financial' system. For years there has been plenty of commodity selling in the paper form-whether oil, nat gas, gold, wheat, copper-and delivery was always put off as most contracts settled for cash. But ever since the oil price went to contango, the game has changed. My theory is that there is a massive short in oil among the US Brokerages as they played the same game with oil as they played with sub prime mtgs. Keep piling on the positions until it breaks. Well they have broken. Selliong oil at 60, 70, 80, 100, 110, 120 etc has taken its toll on the capital of these firms. With these firms busy diluting themselves (ala Nortel) by raising capital at decade lows, all capital requiring positions are going to be unwound. If the CFTC wanted to limit the speculation in the mkt-raise margin requirements. Unfortunately that is probably the last thing they want to do since the buyers are cash buyers while the sellers are on margin. Raising margin requirement would involve the brokers and financial intermediaries needing to raise even more capital to cover their margin calls.