[Rattlesnake Guy]

Every oil futures contract purchased is sold by someone else. The price that makes the seller willing to sell and the buyer willing to buy is influenced by each participants perception of the future price. Is the contract selling at a discount or at a premium. It takes two that disagree on the direction of the price for the sale to take place.

The other trigger of the sale / purchase is the desire to shed the risk of change in price of the commodity or the desire to assume the risk. If I own the oil, I might sell the future to lock in the price the oil is worth today in fear that the price might go down. If I am an airline and will need to buy the oil in July and am afraid the price will go up, I may choose to lock the price in at today's futures price. The speculators allow liquidity in the market that allows the producers and sellers to avoid the gamble they are not willing to risk. Sometimes assuming that risk makes them money, and sometimes it cost them money.

When my mother "pre buys" her oil for the winter at a given price the oil dealer purchases a future to shed the risk. She is in essence one of those speculators who want to benefit from the locking in of the price and avoid the risk of the price going up. On the other side is someone who wants to take some of the premium and is willing to assume the risk that the price will go up.

The free markets actually reduce the price swings because so many are waiting to benefit from the market inefficiencies. The price of gas going into our boats would be a lot less certain if a few oil companies and producers could set the price they want to.