"Speculators" sodomize the blowhards and wingers, oils closes at $141.40 [Archive]

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Bill

07-01-2008, 04:11 PM

Bill

07-01-2008, 04:16 PM

Oily speculations
As energy prices soar, Congress unfairly seeks to blame traders

This article is mostly editorial - i wouldn't desvribe it as serious.

http://www.msnbc.msn.com/id/25463588/

When bad things happen, it’s always nice to have a scapegoat. So, with Americans furious about soaring oil prices, Congress has gone in search of someone to blame.

There are a number of usual suspects to choose from, depending on your politics—OPEC, greedy oil companies, lily-livered environmentalists opposed to oil drilling—but now Congress has seized on another set of villains: commodity speculators.

“Excessive market speculation,” in the words of Sen. Joseph Lieberman, has supposedly inflated the price of oil and other commodities beyond reason. Curb speculation, as a raft of proposed laws intend to do, and oil prices will soon return to Earth.

Speculation has been a favorite target of politicians looking to mollify anxious voters since the time of ancient Greece, when the orator Lysias protested that wheat traders had reduced Athens to a “state of siege.”

Even in market-friendly America, there is a long tradition of denouncing speculators as dishonest, unproductive parasites; the 19th century preacher Henry Ward Beecher decried their “cool, calculating, essential spirit of concentrated avaricious selfishness.” And not unreasonably: The past century is full of examples of avaricious selfishness leading to the manipulation and corruption of markets.

In the '20s, speculators banded together in “stock pools,” trading a particular stock among themselves to create the illusion that its value was rising—in March 1929, a stock pool succeeded in pushing up RCA’s stock price by almost 50 percent in less than two weeks—and then dumping the stock when outside investors bought in. In the late '70s, a speculators’ pool led by the Hunt brothers mounted an attempt to corner the world’s silver market, and at one point controlled an amount equivalent to an entire year’s global production.

Given this history, and the fact that recent years have seen a huge flood of speculative money entering the commodity markets—assets in commodity indexes, by some calculations, increased twentyfold between 2003 and the spring of this year—it’s not unreasonable to wonder if there might be something nefarious behind the sharp run-up in oil prices.

But there’s little convincing evidence that the oil market is being significantly manipulated. Whatever chicanery is occurring—and we can assume there is some—has only a marginal effect on prices at the pump.

Congress is not, though, just attacking illegal market manipulation; it’s also taking aim at perfectly legal speculation, namely the buying and selling of futures contracts, which are effectively bets that oil prices will go up (or down). Futures contracts can be used by oil sellers (like OPEC ) or oil buyers (like the airlines) to hedge their risks by agreeing to sell or buy oil in the future at a set price.

Speculators, by contrast, mostly use futures contracts to gamble on oil prices, and have no interest in buying or selling real barrels of oil. These gambles can be tremendously lucrative, but they don’t directly determine the real (or “spot”) price of oil. That’s set by the people who are buying and selling actual barrels of petroleum. Although speculators could directly distort oil prices by turning their futures contracts into oil and then taking it off the market to drive up prices, a look at oil inventories shows no sign that this is happening.

If speculators aren’t at fault, why have oil prices spiked so high? Fundamental reasons aren’t hard to find.

Between 2000 and 2007, world demand for petroleum rose by nearly 9 million barrels a day, but OPEC has been consistently unable, or unwilling, to significantly increase supply, and production by non-OPEC members has risen by just 4 million barrels a day.

Moby

07-01-2008, 05:26 PM

New record close, as if that needs to be said.

No "speculators" facing justice yet.

Hmmm - maybe the "speculators" are all FOB?

Has the "free market" been taken over by FOB speculators? Is information about oil supply controlled so rigidly that the wingers are helpless to stop these evil-doers?

Why God Why? Why won't you let the speculators be perp walked?

MSNBC says $140.97, (another new record) but bloomberg, which usually has more up to the minute numbers, says $141.40.

http://www.msnbc.msn.com/id/12400801/

http://www.bloomberg.com/energy/
They only have a few more months to use it as a political ploy and Bush's term is ending. If he leaves office without giving away more leases to oil companies that can move to The Middle East then Dick Cheney's Energy Policy has failed. Sure it's made Bush's Middle Eastern friends rich but they didn't get the pot of gold.

That gold can still be used by Americans to protect this country if don't give it away.

kres24GT

07-01-2008, 05:34 PM

The higher gas prices go, the better it is for America. Going up to slowly IMO.

SeedyROM

07-03-2008, 05:48 PM

The perp walks are coming. Hopefully the wallstreet perps and the neocons will be walked onto a ship headed for open waters where the US Navy practice war games. We'll call it Financial Darwanism!!!

disrupter

07-04-2008, 10:39 AM

SeedyROM

07-04-2008, 05:46 PM

It is simply the law of supply & demand.

You will notice the percent rise of oil prices is slowing as market forces come into play.

The Chinese & Indian governments are having to reduce government fuel subsidies, &
Americans are re-thinking their neurotic affection for Hummers & SUVs.

We live in a world that is larger than ourselves, individually & collectively.

If you want to slow down speculation, get Bush to stop ridiculous saber rattling about Iran. Look at what he has done to Iraqi oil production. He has sabotaged that pretty damn well.

People want to create Icons of evil when most often the sources of our problems are vague & distributed & where the best strategy is to tighten up & operate our own lives more articulately, efficiently & with more accurate targeting. Find freedom from within, rather than forever lashing out & trying to take it from someone else.

The biggest determinant in your life is YOU.

Take charge of the potential & the responsibility.

If you don't, it won't happen by magic.

My knee jerk reflexes are more intelligent than some people's neurotic Vilifying of mostly incidental people.

Disrupter, you bought the company line. It is far more than supply and demand. Read up on Wash Sales and manipulation. Supply and demand formulas call for $60 to $70 oil. The criminal crime wave on wallstreet is selling you the same old story that came around in the 1970's, only it is repackaged with today's headline political stories. Speculation is far more important to today's oil prices than politics or declining production/peak oil which may or may not have peaked.

Enron used Wash Sales to manipulate California's electric grid and the prices went thru the roof. Oil is being manipulated the sale way and the loophole they use to hide the trades is now called "The Enron Loophole" This loophole may be closed off as of Thursday July 3rd. They control the supply and they demand we pay the kings ransom in prices.

We could see a drop in price, not a temporary one used to fluff up voters for November, but something longer lasting. Both Obama and McCain after hellbent on controlling speculation. Sure we'll run out of crude one day, but should we reward the Lifestyles of the Rich and Shameless.

http://www.marketwatch.com/news/story/gas-could-fall-2-if/story.aspx?guid=%7B2673C102-68E0-41D9-9C9A-10EE2E723948%7D
"Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel."

http://www.star-telegram.com/100/story/706612.html
What is a "wash sale" and how does it work?
That's a prearranged trade between two or more parties in which there is no economic risk and the sole purpose of which is to give the appearance that the price of a commodity is going higher or lower in a way that does not reflect supply and demand.

Who are these speculators? Do they have names and addresses?
I really cannot answer that with certainty because these unregulated markets are so opaque. Many say that Goldman Sachs & Co. and Morgan Stanley are primary traders on the principal market outside of direct U.S. supervision, the Intercontinental Exchange, otherwise known as ICE. The whole point here is that we need transparency through a thorough investigation to determine precisely what is happening on the Intercontinental Exchange, including who key traders are and the positions they are taking in these markets. That transparency is provided regularly for those exchanges regulated directly by the (futures trading commission).

SeedyROM

07-04-2008, 06:00 PM

Cracking down on speculators and the crime wave!!!

http://www.marketwatch.com/News/Story/lawmakers-vow-strip-secrecy-oil/story.aspx?guid=%7B7AFF8F13%2DBF4A%2D4D16%2DA067%2 D3C0B9D5CB2DA%7D Lawmakers want to strip energy's 'veil of secrecy'
House, Senate bills seek to reveal more on speculative practices, boost CFTC
By Laura Mandaro, MarketWatch
Last update: 6:47 p.m. EDT June 12, 2008Comments: 48SAN FRANCISCO (MarketWatch) -- In the latest salvo against energy speculators, the influential chairman of the House Energy and Commerce Committee vowed Thursday to strip a "veil of secrecy" from energy markets by giving more power to the Department of Energy.
The bill, introduced by Rep. John Dingell, D-Mich., and co-sponsored by Joe Barton, R-Texas, the senior Republican on the committee, would allow the secretary of energy to gather information from multiple federal agencies and commissions on factors affecting the price of oil.
Video: The politics of energy

Doug Holtz-Eakin, John McCain's adviser, proposes suspending the gas tax, while Barack Obama's Dan Tarullo advocates for a cap-and-trade system. (June 12)"This legislation would help bring needed accountability to energy markets," Dingell said in a written statement.
The bill is among several recent proposals from lawmakers and regulators that address the influence of financial speculators in the energy markets.
Oil prices hitting a record $139-plus a barrel last week "has galvanized lawmakers and the regulators they oversee into actions that are increasingly likely to impact market fundamentals," said Kevin Book, an energy policy analyst at Friedman Billings Ramsey, in a report Thursday.
The most visible Congressional efforts over the next several weeks "are likely to be directed at commodity investors themselves," he said.
Some, such as Dingell's and recently announced initiatives from the Commodities Futures Trading Commission, seek more information on trading activity. Others focus on strengthening oversight and at the most extreme, curbing institutional investors' ability to buy futures.
Also Thursday, Sen. Dick Durbin, D-Illinois, introduced legislation to increase the resources and authority of the CFTC, including an addition of 100 employees. It would also close the so-called "London loophole" by requiring all traders in futures markets to report transactions in a detailed manner to the CFTC.
Sen. Joe Lieberman, D-Conn., has flagged a more drastic approach to the role of financial speculators, saying he plans to introduce legislation that would curb the influence of institutional investors.
Threats from Washington to rein in the way investors bet on oil prices are still too far from realization to cool prices, analysts say.
On Thursday, near-term crude oil futures finished the New York session up 36 cents at $136.74, rebounding from more than a 3% loss triggered by a rally in the U.S. dollar. Read Futures Movers.
"I generally discount the impact that the talk has had so far," said Eric Wittenauer, energy and industrial metals analyst at Wachovia Securities. "We'll have to see more action -- the action we've seen of late [in oil prices] is reflective of the dollar performance."
In fact, some proposals could actually increase prices, say analysts. Efforts to raise margin requirements, for instance, could push out traders in short positions -- or traders betting that oil will fall -- by making short positions more expensive, said FBR's Book.
Meanwhile, the U.S. futures regulator has ratcheted up the type of information it requires exchanges to divulge, part of a broader investigation into oil prices.
London trading
Some legislators want the regulator to do more.
Durbin's bill would give the CFTC authority and obligation to obtain trading data from foreign exchanges operating in the United States through direct trading terminals.
On Thursday, Reuters reported the CFTC is working with its U.K. counterpart, the Financial Services Authority, to impose position limits on West Texas Intermediate Crude contracts traded on the IntercontinentalExchange's (ICE:intercontinentalexchange inc com
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ICE 106.00, -2.10, -1.9%) London-based ICE Futures Europe platform. The news service cited an unnamed Congressional source.
A spokesman for the CFTC said he could not comment on the report.
Traders of the West Texas Intermediate contract traded on ICE Futures Europe, which is governed by the FSA, are currently not subject to position limits. That's a difference from requirements in the U.S., where traders face constraints on the size of their net position during the last three days of the trading contract. The rule aims to prohibit speculators from cornering the market when commercial traders are trying to close their positions.
European traders are subject, however, to the FSA's position monitoring, which ensures no one player is overly concentrated in any one month's contract.
"We're working on trying to provide what people are requesting," said Kelly Loeffler, a spokeswoman for ICE.
The exchange handles 20% to 25% of the volume in the WTI oil contract; the rest takes place on the Nymex Holdings' (NMX:nymex holdings inc com
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NMX 78.17, 0.00, 0.0%) New York Mercantile Exchange.
CFTC has said its own analysis of commodities prices and index traders, or investors who invest in commodities via a benchmark, such as the Dow Jones-AIG Commodity Index, has found no significant correlation between these financial investors and recent price spikes.
Still, under pressure by big users and producers of commodities as well as Congress, the regulator has acknowledged that it needs to dig deeper into trading data. On Tuesday, it said it is establishing a task force to study the role of speculators and index traders in commodities that will include representatives of the Federal Reserve, the Securities Exchange Commission and other agencies. See full story