Does Buying Futures Increase Cost?

Posted on May 23, 2008 @ 8:39 am

How much does buying and selling the actual price of a certain commodity in the future affect its price? I have been reading up on futures trading and how the process works. It seems that everyone is doing this from large corporations to the average blue collar worker thanks to the Internet.

But, the question is does buying a future encourage the prices to continue to rise? Does the trading actually affect the demand for the product or is supply and demand completely separate from price?

What led me to think about this is the price of oil and consequently gas prices at the pump. You know that the price of gas has caused an increase in nearly every other type of product that we have to buy. Groceries are outrageous because they have to be trucked in, flown in, or transported in some way by an oil fueled vehicle.

If we quit buying or investing in oil futures, will it bring the cost down for everyone? I wonder.






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