dw57

Do Lawmakers Really Understand the Energy Markets?

well i speculators have to have some defenders don't they? after all if they can't change the story they can't wiggle out of the blame huh?

Speculators Stabilize Oil Prices: Here's Proof

don't think its supply an demand. supply doesn't change that quickly (short of major bombs being dropped). and all of the so called news that happened in this time frame had been going on for decades. and then there is all of that oil that ended up in tankers and any place else it could get stored. or those who drove the price never ever took delivery. the purpose of these markets as was sold to every one, was to try and reduce the volatility not increase it. but it was really also just for those who actually will take delivery (can you say airline? trucking company?) and those who produce (so they knew how much demand there was and could project production). banks and other financial companies aren't in eitehr category

and demand started tanking in 2006, and got really deflating in 2007. before we ever had that big price spike.
what we can tell is this. a market that had maybe 9 billion before 2006, explodes in to closer to 200 billion?

now inflation usually is defined as to much money chasing not enough or very much product/commodity.
which is what happened here


On Aug 03 03:18 PM Rayden wrote:

> On Aug 03 02:24 PM Paul H. M. wrote:

Speculators Stabilize Oil Prices: Here's Proof

I think they define commercial originally as a buyer who needed the commodity or produced it. banks are neither


On Aug 03 11:26 AM Storm Cat wrote:

> "The CFTC has granted Wall Street banks [like Goldman Sachs] an exemption
> from speculative position limits when these banks hedge over-the-counter
> swaps transactions.
>
> Right. The exemption was granted to permit banks to hedge the transactions
> they enter into with Oil & Gas companies (who are hedging production).
> Why should a bank's hedge of such a transaction be included as a
> speculative position when it is plainly "Commericial" in nature.?
>
>
> I do agree that classifiying a bank entirely as "commericial" yields
> inaccurate data because they do also take speculative positions.
> However, the broad brush you are using overestimates the magnitude
> of the distortion.
>
> "The really shocking thing about the Swaps Loophole is that Speculators
> of all stripes can use it to access the futures markets. So if a
> hedge fund wants a $500 million position in Wheat, which is way beyond
> position limits, they can enter into swap with a Wall Street bank
> and then the bank buys $500 million worth of Wheat futures. "
>
> Except that the vast majority of HFs don't execute a position of
> such magnitude on a linear basis (ie, long/short). Moreover, banks
> don't take unlimited credit risk on HFs. Such a position (long/short)
> would most likely need to be fully collateralized making it cost
> prohibitive. Moreover, the counterparty would need an ISDA agreement
> and credit/risk limit approval
>
> " Another example of the effects of speculators in the crude oil
> commodities market was the “ Rogue Trader” who with a 16 million
> barrel order of crude, pushed up the price of crude oil $4 in the
> blink of an eye."
>
> I trade oil for a very large bank. No salesman would execute an
> 18MMbbl order without insuring it is authorized. Moreover, an order
> like that isn't executed "in the blink of an eye". It is executed
> quietly and slowly over the course of one or more trading sessions.
> Finally, a "rogue" trader can and does happen in ALL markets.

It's the Oil Price, Stupid!

not sure why the author thinks there was strong demand last year. when the amount of gas being used has been collapsing since 2007, and the number of miles driven has also been collapsing. and the amount of oil being stored has been sky rocketing. all of the price for about 2 years has been driven by one thing speculators. and most of them were trying to make up for losses in other investments

Checking in on Oil's Fundamentals

not sure why any one thinks oil is going up for any other reason that some are speculating on it. there is more oil in storage today than ever before,and its to the point that they are having to invent new places to store it. right now and for the foreseeable future, the US will not be generating new demand, but instead will have more demand destruction. the consumer is tapped out, their incomes are falling, and the old crutch (supplied by wall street) is gone. and wall street needs to find a new (old) game to play. so oil will go up based on speculation only. and i suppose they can wait to deliver the oil (unlike other commodities) since it doesn't spoil

Oil at $50/bbl: Where to from Here?

while oil may go up, we will actually have to see some demand growth as opposed to today's relentless demand destruction. and even while that destruction was gathering steam, it seemed oil was sky rocketing, leading to the obvious conclusion there was a lot of speculation in the market. and since the oil market has so many dark markets and nobody really knows how much oil they really have or what any body else has pr has shipped (proprietary info of course!) it makes a free market impossible because too many are gaming it. so can oil sky rocket again? sure just get some speculators going again!! course they will have to find some capital to do it this time on their own. the investment banks are gone

Oil Price Economics the 60 Minutes Way

there wasn't a supply demand issue. the difference is demand from supply has been about the same amount for years. the supply numbers and demand number have been really close but it wasn't last year. a lot of the oil contracts that were bought ended up in losses. all of last year there was oil put into reserve, as was gasoline. and the oil refiners weren't running at the normal rate because the lost money on gasoline. and we still put more of the stuff into reserve. and oil was stored in tankers as it had no place to go and couldn't find places to be stored. and if it was supply issue short of an attack on a major oil field (like in Saudia Arabia) that was successful how does any body explain a $20 surge in oil prices? That happened this summer. and the markets in question all have testified they are dark. I.E. about as transparent as a steel drum. intentionally. so that nobody can know who is fiddling with the price of oil. thats the life blood of many companies. and countries.

Oil Won't Stay Down for Long

a lot of the price run up in oil was speculation, no question, it was to make up for the loss in incomes in other areas (say stock or CDS or you name it). if it were really a supply and demand problem why was it that were in the same situation in the preceding years as far as how much supply out stripped demand? and if was not speculation why would it go up in large increments in only days? when nothing had happened. and things that seemed to drive it, had been happening for decades.