The Oil Scam Driving Crude Over $80 54 comments
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Let’s talk about the nonsense going on over at the NYMEX.
It’s not just the activity at the NYMEX that’s disturbing but the way the press, who used to be the kind of people who would check out a story, simply publishes whatever spin the wealthy sponsors and their PR firms feed them.
You can’t blame the media. The only word they love more than "crisis" is "scandal", but not when the scandal involves one of their advertisers. So, given the choice, they go with "energy crisis" over "oil scam" but let’s dig a little deeper than the average reporter….
The story you’ll hear for Monday is that oil rose $1.10 to $80 on tight supply concerns that drove prices higher.
The truth is that 257M barrels of oil for October delivery were bought AND sold on the NYMEX, which started the day with 197,270,000 barrels yet, strangely, suspiciously even, at the end of the day orders for oil to be delivered in October dropped to 171,442,000 barrels. How can the price of something go up while the demand for it goes down? COLLUSION. Collusion is "a secret understanding, esp. for a fraudulent purpose." Yep, that pretty much describes it in a nutshell.
If it were just the one day, we could brush it off as a fluke and consider our evidence circumstantial but here’s how trading went for the past 4 days since Tuesday, when I predicted that NYMEX traders had no intention of accepting the 289M barrels they had ordered for October:
In the Boston Tea Party, patriots dumped tea into the ocean rather than pay the taxes imposed by a distant king. On the NYMEX, they dumped 117M barrels that were scheduled to be delivered to the American people - BARRELS YOU ALREADY PAID FOR AT THE PUMP - in order to create a bogus shortage so you can pay record high oil prices to a distant sheik.
This isn’t just criminal behavior - it’s TREASONOUS!
“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear. The traitor is the plague.” - Marcus Cicero
Look at what’s happening. I said on Tuesday:
I will tell you right now that these traders, including the 296M barrels that were bid yesterday to drive oil to record highs, HAVE NO INTENTION WHATSOVER OF ACCEPTING DELIVERY. In fact I will tell you right now that in the next 7 days, they will cancel over 220M of those barrels, which will then be measured in the October inventory reports as a "shortage" and they will then concentrate on rolling over the November contracts, currently with 248Mb on order at $76.26.
So what did happen? Well the traitors cancelled 117,558,000 barrels of oil, that’s 29M barrels A WEEK from October delivery in order for the weather girl on CNBC to be able to tell you every Wednesday at 10:30 how tight supplies are. And what did they do with those barrels? The same thing they do every month, they "roll" the contracts into the forward months, creating a false demand there for oil they never intend to accept delivery of and they have done it EVERY SINGLE MONTH FOR THE PAST 2 YEARS!
But, they are not done…
Were the traitors traders to accept delivery of the 171,442,000 barrels of oil that are still open today, BARRELS THAT THEY HAVE ALREADY BILLED YOU FOR, it would create the biggest glut of oil in US history and crash the oil markets. So these traitors traders will, in the next 4 days, CANCEL ANOTHER 130M BARRELS OF CRUDE and slip the majority of them into the next 3 months in order to create the perception that there is, simultaneously, a record demand and a tight current supply.
It is all smoke and mirrors and it all takes place on the open trading floor of the NYMEX and it’s costing the American people (at $80 a barrel) $1.6Bn per day, $11.2Bn per week, $48Bn a month - $576Bn a year. It’s a crime that’s committed right under our noses and the only way to stop it is for you to get mad!
Unlike Howard Beale in Network, I DO want you to write to your Congressman and I do know what you should say. Tell them you are as mad as hell and you’re not going to take it anymore! Send them this article and tell them to LOOK. Don’t take my word for it just start to watch, have an aide make a chart and keep track. Call a few traders in to testify and explain the logic of their actions. Ask why we are being charged for oil at "front-month" prices when they manipulate the front month contracts by ordering barrels they have absolutely no intention of accepting delivery of.
Ask them who gives the orders, ask them who signs the checks - FOLLOW THE MONEY!
Speaking of Exxon, that company’s market cap jumped back up to $495Bn again and may touch the magic $500Bn mark again tomorrow so let’s see if they can hold it despite the fact that refining margins, which saved them last quarter, are down over 30%.
Exxon is the world’s most valuable company. They don’t cure cancer, they don’t feed people, they only employ 106,000 people - 1/4 McDonald’s 465,000 (market cap $65Bn), 1/3 of Sears’ 352,000 ($18Bn), less than 1/2 of Home Depot’s 247,000 ($70Bn), 30% less than P&Gs 138,000 ($212Bn), a little more than 1/3 of GM’s 280,000 workers ($20Bn) and just over Pfizer’s 98,000 (167Bn). So we richly reward the company that rakes in the most money - through whatever means necessary, while employing relatively few people…
Is this the map for America’s future?
It’s a microcosm of what’s going wrong with our society. Manufacturing jobs are shipped overseas and XOM gains over $300Bn in market cap since 2002 without hiring more workers or producing more oil - it’s the same people, doing the same work for MUCH more money. How much more? In 2002 XOM billed us $200Bn for their products. In 2006, they produced 5% LESS product and billed us $165Bn more ($365Bn) for it and their operating income jumped from $17.5Bn (8.7%) to $67.4Bn (18.5%).
That’s right, they raised the price of oil from $30 a barrel to $80 a barrel, costing the American people over $500Bn a year in retail product prices in order to make an exta $50Bn. God bless us, everyone!
"War is when the government tells you who the bad guy is. Revolution is when you decide that for yourself."
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is genuine collusion, let the market and FBI investigate it; let Congress regulate it; but let's not draw ridiculous far-reaching conclusions just because the commodity traders are using the rules to profit after absorbing all the risk the public has been relieved of...
It's really very simple. Supply and demand. Demand is climbing, supply has been flat for three years. Everything else is just noise. Just take an objective look at the EIA data (unless of course you think they're also in cahoots with the NYMEX traders, the government, big oil and the Easter Bunny) and the trend is obvious.
But of course, if the facts get in the way of a preconceived notion, just find some numbers that can be shaped to your call it a conspiracy. Because heaven forbid you couldn't possibly just be WRONG.
Oil/Gas are going substantially higher because of fundamentals. My advice...slam this loser everytime he writes his over inflated nonsense. Buy oil/gas Closed End and Exchange Traded funds when there are dips..and wait for the numerous things that are telling everyone..except this clown...that higher prices and profits are coming.
Revas, I would love to hear your take on why 270K contracts were traded today netting a drop of 48K open (1/3) leaving just 123Mb on order. Who benefits from all the buying and selling when they all know they are paying a premium for contracts they absolutely need to cancel on Thursday?
If there are absolute long-term supply and demand issues in play here, why can you buy a barrel for under $75 anytime after next June? Also, why don't people - not airlines, not car companies, not industrial users... If I could buy options on XOM (and I don't even like them) for $13 less than the market price now for delivery in 2015, I'd pretty much just do that and retire - yet no one wants $69 barrels of oil for Dec 2015?
Crying foul when prices move against you also makes you look silly.
Being an oil bear doesn't make you look silly. You can believe whatever you want to believe and place your bets based on that, that's cool. The more believers/gamblers we have, the more liquidity, they tell us. And the more liquidity, the cheaper it is to make bets and the more efficient the system is supposed to be, or so they tell us. I'm not necessarily a believer in that, but that's a different story.
But when you made your bet and then something doesn't go your way you have to accept that either you were wrong (abandon position) or . . . the rest of the world is temporarily insane (keep betting against the world). It doesn't matter how many contracts cancel. They always did, do and always will. When you try to make a story out of it and try to convince the world that it is insane based on that "news" it makes you look almost as ridiculous as when you argue that backwardation is illogical because . . . of something that had to do with options on XOM. Not quite as ridiculous, but you know what I mean.
Wow, he predicted that open interest in the delivery month is going to go down and rolled to deferred months! Amazing!
Market participants roll from the delivery month to the second month in EVERY futures market, from bonds to beans to euros, thereby transferring open interest to a contract not subject to delivery.
To equate open interest with "orders to be delivered", and a reduction in open interest as "canceled orders" is ludicrous.
Please, take a basic commodities course offered by any futures exchange, or speak with a 1st year staffer at the CFTC and you will realize how ridiculous this treatise sounds.
And Phil, please, give it a rest.
Suppose there was some credence to this supposed nefarious plot. With the 2008 presidential race in full swing, wouldn't you expect one of the Democratic contenders--maybe Gravel or Kucinich--to raise the issue, in an effort to break out of the pack? Given the voters' anger over high gas prices--let's face it, this is something they relate to--I can't think of a more potent issue politically.
If they don't, I guess we're just destined to be crucified upon a cross of oil.
In other countries, price is controlled by nationalizing the oil companies. Is this what you want? Nationalize Exxon? Sure, they are a bunch of pirates, but they (unlike the federal government) actually know how to produce and distibute the stuff!
Exxon doesn't cure cancer or feed people. BUT, they sell the drug companies petro-chemicals, they sell the farmers the diesel to grow the food! They sell you the gas you put in your car, and they sell the utilities the fuel to make the electricity to run the network that allows silly people like you to rant on about, well, whatever. You may not like it (I don't), but without the oil companies, life in this country stops. Without the oil they produce, we have a 19th century lifestyle.
If you want a traitor to go on Capital Hill and explain himself, my email address is shiboke(replace with an ampersand)gmail.com. I'll give them an earful. In the meantime, please pull your head out, get some oxygen, go learn about futures markets and oil, and then write something. Learning something about a topic before you write about it makes your prose more effective