Speculation and the 2008 oil bubble: The DCOT Report analysis

This article analyzes the CFTCʹs Disaggregated Commitments of Traders (DCOT) Report to get more insights into the behavior of different traders during the 2008 oil bubble. The analysis shows that: (1) the Money Manager category perfectly played the oil bubble, got in early and started selling shortly before the bubble peak; (2) the Producer/Merchant/Processor/User category and the Nonreportable category were covering their short positions into the peak of the bubble; (3) the Swap/Dealer category benefited while the price of oil was rising, but incurred heavy losses as the price of oil collapsed; (4) we find no indications of speculation by any group of traders via the positive feedback trading or rational destabilization; and (5) we do, however, criticize the commercial hedgers for failing to arbitrage the soaring oil prices in 2008.