So that when you have the fundamentals pushing the market in one direction, people don't just stack up in that one direction and hope that they are able to trade. You need speculators to provide that liquidity. It is interesting, this concept of speculation, because people sometimes view it unfavourably. I won't call it gambling because it isn't gambling. I have bought shares in the expectation that the share price will move in a favourable direction and I will make a return on my investment.
People trade the oil markets for just the same reason.
The only difference between a speculator and a physical player is that a speculator generally won't have an interest in having a physical supply or delivery of oil. A speculator is there to invest in the price of oil. And you need to have investment opportunities in oil or the market just won't trade. So a speculator will be buying oil today, based on the expectation of his understanding of the market fundamentals and his analysis of economic factors and IEA statistics, that if he buys today he will have the chance to sell tomorrow at a higher price. That is no different from someone investing in stocks and shares.