I believe that there are clearly more investment dollars in the oil futures market (thank you, in part, Ben Bernanke).

Perhaps it is the case that there could be (insert your own percent)% speculators in the market at any given time, but based on whether they are long and/or short they may not have a corresponding effect on price - one way or the other.

On Friday Karl Denninger said this in his Frightful Friday commentary:

Now The House has come up with a bill that will "restrict" commodity speculation, never mind that a commodity speculator provides liquidity and price discovery, not price setting or forcing. This is obvious to anyone with more than two firing neurons, but it doesn't matter - the people are demanding that someone be "to blame" for high oil prices, and its not acceptable for Congress to say "well, we did that and so is The Fed, and we won't stop them", so they blame "commodity speculators."

The truth on commodity futures (e.g. oil) is simple - if I buy a futures contract that tends to force the price upward, but as expiration approaches if I do not want to take delivery of that oil I must sell that contract and buy the next month's out. In doing so I drive the price of the front month down at the same rate I drive the forward contract up - the net effect is zero. Further, you can determine the total impact of these contracts as they are unwound every month when the futures expire, and the last expiration (which just passed) we saw that the true impact is just a few dollars - under $5/bbl.

Moe Gamble said this on Friday's DB:

At this point, if the government bans speculators and pension funds from the commodity markets, the price of oil will go up sharply.

That's because speculators are now net short.

Specs short: http://www.cftc.gov/dea/futures/deanymesf.htm (Add speculators to nonreportables for total spec open interest.)

Net investment outflows from energy in second quarter: http://www.bloomberg.com/apps/news?pid=20602099&sid=ace77xJYOjNU&refer=e...

"Investors" and speculators departed longs and then got increasingly short through the second quarter as the price rose from $100 to $140.

So, it seesm that if you know where to look and how to interpret that it is realtively "easy" to determinthe level and effect on specualtion in the market.

Perhaps the what, where , and how of oil futures speculation effect could be the suject of a guest post by someone who can walk (many of) us through this?

Of course this seems to be happening downthread ;-)

Pete