Oil Speculators: Still Waiting for that 'Thank You'

As the snow fell this weekend, my thoughts wandered to the balmy days of late June 2008. Oil prices were screaming higher and the U.S. Congress took notice. In a series of painful hearings, oil executives were grilled about record profits and oil speculators were taken to the woodshed. Unfortunately, the speculators were not represented and could not defend themselves. This was fine with the Congress, since speculators were probably too busy manipulating oil prices to record highs. The Congress referenced the commitment of traders report (COT) as evidence that oil speculators were at work driving up oil prices; they showed charts that illustrated that as long positions increased, oil moved up almost 65%.

Indeed, looking at the COT data for 2008 it is easy to see that speculators increased their long positions ahead of the price spike in July. This was enough evidence for the Congress and even John McCain to publicly indict speculators without giving them the ability to defend themselves.

From October to November 2008, speculators once again increased their positions, except this time they were net short. During this time crude oil prices on the NYMEX decreased from $109 to below $50, over a 50% decline. The decline in oil prices may be the only bright spot in the current economic climate.

This leads me to my original question, where are the Congressional hearings thanking speculators for driving oil prices down?

Disclosure: None

Comments

[goingbankrupt:]

The evil that men do lives after them
The good is oft interred with their bones

What else is new?

2008 Dec 09 06:26 AM

[john s. gordon:]

you can't be serious -

thank speculators for shafting consumers, airlines, general motors, etc.?
> jack

2008 Dec 09 09:37 AM

[User 151130:]

All he's saying is: it's a double edged sword - seculation drove the price too high, now it's driving it too low.


On Dec 09 09:37 AM john s. gordon wrote:

> you can't be serious -
>
> thank speculators for shafting consumers, airlines, general motors,
> etc.?

2008 Dec 09 10:29 AM

[BrotherMaynard:]

"you can't be serious -

thank speculators for shafting consumers, airlines, general motors, etc.?"


i agree. congress is a form of representation. The majority of the constituents that congress represents are net short oil. congress starts complaining when people start complaining. don't blame congress, blame the 300 million people that are being whacked for the sake of "market liquidity"...ubelievab...

2008 Dec 09 12:32 PM

[El:]

John S. Gordon, you dont get it do you. Speculators do not move markets they follow market movements they do not control markets. A large percentage of speculators lose money, 85% by some estimates, how can they be in control when they are losing by a large percentage ?
If in fact there is a large percent of spec money at the high it is only can down. Conversely if a large percent are short at the lows it is only a matter of time before a big rally.
The Airlines executives had ample opportunity to hedge their risk but chose not to, much like an uninsured driver. Southwest paid the premium and hedged and rode out the storm. GM placed their production in SUVs and Pickup Trucks poor decisions = poor results

As a speculator I too am rewarded /punished for my decisions. I wouldn't have it any other way


On Dec 09 09:37 AM john s. gordon wrote:

> you can't be serious -
>
> thank speculators for shafting consumers, airlines, general motors,
> etc.?

2008 Dec 09 05:29 PM

[BrotherMaynard:]

"Speculators do not move markets they follow market movements they do not control markets."

just like tech and housing and credit and...

2008 Dec 10 01:47 PM