Oil Prices tumble - $105/barrel & dropping
05-06-2011, 12:03 PM
#31
Gets Weekends Off
Joined APC: Jan 2008
Position: 747
Posts: 731
Originally Posted by jungle
That would be the regulators and that is an excellent idea, but they aren't going to let you put them in jail.
What you are really saying is that we do not have a free market under the present conditions, and I agree. Speculators and oil companies don't make the rules, they just have to live by them.
If you want lower prices cut the taxes, free up domestic production and encourage exploration. In other words deregulate.
If you want disaster try to fix the problem via price regulation as was tried in the early '70s. That little experiment didn't work out too well.
Central planning of economies always results in failure, markets respond faster than any human effort to steer them by artificial means.
What you are really saying is that we do not have a free market under the present conditions, and I agree. Speculators and oil companies don't make the rules, they just have to live by them.
If you want lower prices cut the taxes, free up domestic production and encourage exploration. In other words deregulate.
If you want disaster try to fix the problem via price regulation as was tried in the early '70s. That little experiment didn't work out too well.
Central planning of economies always results in failure, markets respond faster than any human effort to steer them by artificial means.
05-06-2011, 01:57 PM
#32
Gets Weekends Off
Joined APC: Feb 2007
Position: FO
Posts: 3,032
Originally Posted by olympic
demand was always high in the united states for oil, we just see the price keep going up, the problem is that they are taking advantage of the free market, paying off betters to raise the price of oil to make these ridiculous amount of profits. It's a game and we're stuck in the middle .. all of us.
The margin needs to be raised, because right now it is cheap to borrow cash and buy oil, silver, or gold without having to put a large portion of your own capital into it.
The Metals Exchanged has raised the margin on silver trades twice and is going to do it a third time, making you, the investor, put in much more of your own money before you can put in borrowed cash. Guess what it got hammered
I personally dislike Jim Cramer and most of the jackass' that give stock advice on CNBC (al they do is talk up or down their positions), but I agree with him here... News Headlines
05-06-2011, 02:40 PM
#33
Gets Weekends Off
Joined APC: Jul 2010
Posts: 363
Originally Posted by BlueMoon
It is, the futures is a joke, and are out of whack...it especially with the low interest rates.
The margin needs to be raised, because right now it is cheap to borrow cash and buy oil, silver, or gold without having to put a large portion of your own capital into it.
The Metals Exchanged has raised the margin on silver trades twice and is going to do it a third time, making you, the investor, put in much more of your own money before you can put in borrowed cash. Guess what it got hammered
I personally dislike Jim Cramer and most of the jackass' that give stock advice on CNBC (al they do is talk up or down their positions), but I agree with him here... News Headlines
The margin needs to be raised, because right now it is cheap to borrow cash and buy oil, silver, or gold without having to put a large portion of your own capital into it.
The Metals Exchanged has raised the margin on silver trades twice and is going to do it a third time, making you, the investor, put in much more of your own money before you can put in borrowed cash. Guess what it got hammered
I personally dislike Jim Cramer and most of the jackass' that give stock advice on CNBC (al they do is talk up or down their positions), but I agree with him here... News Headlines
Hope they get burnt this week, tired of paying the price for somebody else's gambling addiction!
KC
05-06-2011, 04:05 PM
#34
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
After the spike of 2008, much was made of speculators and their ilk, but nothing was done.
------------------------------------------------------------------------
Meet the Mystery Oil Speculator
By DEALBOOK
LinkedinDiggFacebookMixxMy SpacePermalink15 CommentsTwitter .Oil prices have retreated from their frothy peak of nearly $150 a barrel. But Washington hasn’t abandoned its pursuit of speculators in the commodities market, a quest that some fear could throw a wrench into one of Wall Street’s most important profit engines.
The Commodity Futures Trading Commission could now be helping lawmakers shine a light on the murky world of energy trading. In July, the futures regulator reclassified one of the world’s largest oil traders from a commercial hedger to a speculative trader.
The trader’s identity wasn’t revealed in the commission’s report. But The Wall Street Journal and the Washington Post are reporting that the mystery speculator was a Swiss oil marketer called Vitol.
This firm isn’t widely known in the United States, but according to reports, it seems to have been a massive player — at one point it accounted for more than 10 percent of all the oil contracts traded on the New York Mercantile Exchange.
With the oil trader reclassified as a speculator, noncommercial speculators suddenly represented more than 50 percent of all the bets outstanding on the crude-oil benchmark traded on the Nymex.
The vast majority of speculative trading on the oil market happens “off-exchange” in the relatively opaque world of over-the-counter swap trading. Nevertheless, the fact that the futures market is now dominated by speculators could give lawmakers more ammunition to push through several bills that aim to curb speculation in the oil markets.
That could be bad news for the Wall Street banks that have made a killing over the years trading oil. All the major investment banks trade energy products, but it is difficult to ascertain exactly how much they make — most bury the results in their financial statements. Citigroup is one that doesn’t: It reported that it made $686 million last year from its commodities trading principal operations. (The firm says these numbers mostly comprise results from Phibro, which trades “crude oil, refined oil products, natural gas, and other commodities.”)
Other investment banks, such as Morgan Stanley and Goldman Sachs, are said to be even bigger players. With the investment banks still reeling from the subprime mortgage mess, any loss in income at this point could be hard to absorb.
Goldman doesn’t seem to be taking any chances. It has spent big bucks in lobbying fees in an effort to persuade lawmakers that limiting speculation is the wrong way to go. In the second quarter of this year, Goldman spent nearly $1 million in lobbying fees on a wide range of issues, including 22 resolutions in Congress aimed at curbing speculation in the energy markets.
Speculators contend that they increase price transparency and liquidity in the market, which actually reduces the potential for market manipulation. The more people and money are in the market, speculators argue, the lower the chances that one trader can build up a large position and artificially move prices.
But the revelation that Vitol, a little-known Swiss firm, had such a large position in the relatively transparent futures market, could undermine this view. Expect lawmakers bent on closing the oil casino to take note.
--------------------------------------------------------------------
The bottom line is that speculation may lead to short term moves(both up and down), but long term trends are demand and supply driven.
The largest speculators are banks and trading companies fed by your tax dollars in the form of TARP funds, cheap money from the FED and other bailouts. Even if this could be controlled in the US, and it won't be without real change, oil will always be traded in markets we cannot regulate.
Higher margin requirements are a plus, but speculation is a fact of life and widely used as a tool by airlines, industry and banks /trading houses. It is what they do, and every stock market is based on speculation-which is in fact just people's belief in the value of a given stock or commodity.
The recent ongoing housing bubble is a good example of regulation gone astray. Much was made of Wall Street evil, but it was government guarantees on mortgages that allowed bundles of mortgage based securities to be sold as something "trustworthy" in the first place.
------------------------------------------------------------------------
Meet the Mystery Oil Speculator
By DEALBOOK
LinkedinDiggFacebookMixxMy SpacePermalink15 CommentsTwitter .Oil prices have retreated from their frothy peak of nearly $150 a barrel. But Washington hasn’t abandoned its pursuit of speculators in the commodities market, a quest that some fear could throw a wrench into one of Wall Street’s most important profit engines.
The Commodity Futures Trading Commission could now be helping lawmakers shine a light on the murky world of energy trading. In July, the futures regulator reclassified one of the world’s largest oil traders from a commercial hedger to a speculative trader.
The trader’s identity wasn’t revealed in the commission’s report. But The Wall Street Journal and the Washington Post are reporting that the mystery speculator was a Swiss oil marketer called Vitol.
This firm isn’t widely known in the United States, but according to reports, it seems to have been a massive player — at one point it accounted for more than 10 percent of all the oil contracts traded on the New York Mercantile Exchange.
With the oil trader reclassified as a speculator, noncommercial speculators suddenly represented more than 50 percent of all the bets outstanding on the crude-oil benchmark traded on the Nymex.
The vast majority of speculative trading on the oil market happens “off-exchange” in the relatively opaque world of over-the-counter swap trading. Nevertheless, the fact that the futures market is now dominated by speculators could give lawmakers more ammunition to push through several bills that aim to curb speculation in the oil markets.
That could be bad news for the Wall Street banks that have made a killing over the years trading oil. All the major investment banks trade energy products, but it is difficult to ascertain exactly how much they make — most bury the results in their financial statements. Citigroup is one that doesn’t: It reported that it made $686 million last year from its commodities trading principal operations. (The firm says these numbers mostly comprise results from Phibro, which trades “crude oil, refined oil products, natural gas, and other commodities.”)
Other investment banks, such as Morgan Stanley and Goldman Sachs, are said to be even bigger players. With the investment banks still reeling from the subprime mortgage mess, any loss in income at this point could be hard to absorb.
Goldman doesn’t seem to be taking any chances. It has spent big bucks in lobbying fees in an effort to persuade lawmakers that limiting speculation is the wrong way to go. In the second quarter of this year, Goldman spent nearly $1 million in lobbying fees on a wide range of issues, including 22 resolutions in Congress aimed at curbing speculation in the energy markets.
Speculators contend that they increase price transparency and liquidity in the market, which actually reduces the potential for market manipulation. The more people and money are in the market, speculators argue, the lower the chances that one trader can build up a large position and artificially move prices.
But the revelation that Vitol, a little-known Swiss firm, had such a large position in the relatively transparent futures market, could undermine this view. Expect lawmakers bent on closing the oil casino to take note.
--------------------------------------------------------------------
The bottom line is that speculation may lead to short term moves(both up and down), but long term trends are demand and supply driven.
The largest speculators are banks and trading companies fed by your tax dollars in the form of TARP funds, cheap money from the FED and other bailouts. Even if this could be controlled in the US, and it won't be without real change, oil will always be traded in markets we cannot regulate.
Higher margin requirements are a plus, but speculation is a fact of life and widely used as a tool by airlines, industry and banks /trading houses. It is what they do, and every stock market is based on speculation-which is in fact just people's belief in the value of a given stock or commodity.
The recent ongoing housing bubble is a good example of regulation gone astray. Much was made of Wall Street evil, but it was government guarantees on mortgages that allowed bundles of mortgage based securities to be sold as something "trustworthy" in the first place.
Last edited by jungle; 05-06-2011 at 04:44 PM.
05-06-2011, 04:12 PM
#35
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Originally Posted by kc135driver
I've never quite understood what part of capitalism had to do with buying something you will never physically possess (commodity future) with money you do not physically have (margin).
Hope they get burnt this week, tired of paying the price for somebody else's gambling addiction!
KC
Hope they get burnt this week, tired of paying the price for somebody else's gambling addiction!
KC
People are always getting burnt, they did it with oil, CDOs, the housing market, tulips, etc. We tend to make the most of those who happen to make money, but there have been some huge losers out there to match.
Highly leveraged speculation of any sort is a tool that can cut both ways, and it always does.
Last edited by jungle; 05-06-2011 at 04:29 PM.
05-06-2011, 04:15 PM
#36
Gets Weekends Off
Joined APC: Jul 2007
Position: 744 CA
Posts: 4,772
Originally Posted by olympic
I agree , but don't you think regulations should be in place to ensure competition so that the best provider, not the biggest, makes the most profit??
05-06-2011, 04:21 PM
#37
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Originally Posted by olympic
I agree , but don't you think regulations should be in place to ensure competition so that the best provider, not the biggest, makes the most profit??
How would you judge the best provider? How can any be cheaper than the market price of the crude stock they have to buy?
05-07-2011, 05:10 AM
#39
Gets Weekends Off
Joined APC: Jul 2010
Posts: 363
Originally Posted by jungle
Most of us never physically possess the stock certificates of companies we buy shares in, much less a real part of that company. Do you think your bank actually keeps your cash in a storage room? Is a home loan not a highly leveraged speculation with money you don't have?
People are always getting burnt, they did it with oil, CDOs, the housing market, tulips, etc. We tend to make the most of those who happen to make money, but there have been some huge losers out there to match.
Highly leveraged speculation of any sort is a tool that can cut both ways, and it always does.
People are always getting burnt, they did it with oil, CDOs, the housing market, tulips, etc. We tend to make the most of those who happen to make money, but there have been some huge losers out there to match.
Highly leveraged speculation of any sort is a tool that can cut both ways, and it always does.
I hear what you are saying but don't think it is the same thing. I wasn't really trying to make the distinction of actually physically holding something, just that using leverage to purchase the option of buying/selling of a commodity lends itself to chaos and runs over any sanity placed in supply/demand curves. It isn't that leverage or owning a future commodity is bad, its when you combine the two.
The price of crude plays such a large role in the economy (as opposed to pork bellies and gold) that it is always the consumer who gets the bill for the reckless gambling. It would be better for society if they would just go to vegas and play the slots with an unsecured credit card advance.
KC
05-07-2011, 07:00 AM
#40
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Originally Posted by kc135driver
Jungle-
I hear what you are saying but don't think it is the same thing. I wasn't really trying to make the distinction of actually physically holding something, just that using leverage to purchase the option of buying/selling of a commodity lends itself to chaos and runs over any sanity placed in supply/demand curves. It isn't that leverage or owning a future commodity is bad, its when you combine the two.
The price of crude plays such a large role in the economy (as opposed to pork bellies and gold) that it is always the consumer who gets the bill for the reckless gambling. It would be better for society if they would just go to vegas and play the slots with an unsecured credit card advance.
KC
I hear what you are saying but don't think it is the same thing. I wasn't really trying to make the distinction of actually physically holding something, just that using leverage to purchase the option of buying/selling of a commodity lends itself to chaos and runs over any sanity placed in supply/demand curves. It isn't that leverage or owning a future commodity is bad, its when you combine the two.
The price of crude plays such a large role in the economy (as opposed to pork bellies and gold) that it is always the consumer who gets the bill for the reckless gambling. It would be better for society if they would just go to vegas and play the slots with an unsecured credit card advance.
KC
Little is known about Saudi Arabia, because they will not allow a public audit of their reserves, and they have their share of unrest.
No matter what the US does, they remain a rather small player in oil production and unable to control world pricing or production.
Oil is vital to the economic health of the world, and that is exactly why there is so much speculative interest.
In the end, supply and demand will move the price and speculation can't change that except during short term spikes of unrest.
The consumer is best protected by limiting their own need for oil, there are many ways to do this and they all have their own costs to consider.
Don't sweat the oil speculators - Street Sweep: Fortune's Wall Street Blog
2008 all over again. I think it is safe to say that a weak economy and devalued dollar has driven a lot of money into commodities as a safe haven. We saw this after the housing crash then, we are seeing a dollar crash now.
http://money.usnews.com/money/blogs/...il-speculators
Thread
Thread Starter
Forum
Replies
Last Post
unemployedagain
Hangar Talk
26
02-07-2009 04:37 PM
