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Oil Speculation Was "Way Out of Scale"

A

Anonymous

Guest
Yep- just like the former CFTC commissioner testified to Congress months ago- when he also testified that the CFTC commissioners had been told to "take an 8 year vacation" by GW... :roll:
And the father and main drive behind all these law repeals (that had worked for 50 years) to allow rampant unpoliced/unregulated in the dark speculation on energy/oil was none other than McSames #1 economic advisor-former campaign Chairman- and who at one time was touted by the party to be his Treasury Secretary-- "Foreclosure Phil" Gramm..
:( :(

Big Speculators Drove Oil Higher

Wednesday, September 10, 2008 3:09 PM

Speculation by large investors -- and not supply and demand for oil -- were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday.




The report by Masters Capital Management said investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July.




Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said. Oil traded at about $102 a barrel Wednesday on the New York Mercantile Exchange.




"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, calling the amount of money moving into oil futures markets by large institutional investors in the early part of the year "way off the scale."




Masters said its analysis shows investors "began a massive stampede for the exits" on July 15 and that this caused the price decline.




"These large financial players have become the primary source of the dramatic and damaging volatility seen in oil prices," concluded the report.




The report was released Wednesday by House and Senate sponsors of bills to put additional curbs on oil market speculation and comes in advance of a report on oil market speculation expected possibly this week by the Commodities Futures Trading Commission. The commission regulates commodity markets.




Sen. Maria Cantwell, D-Wash., a sponsor of an anti-speculation bill, said the Masters report challenges CFTC claims to date that supply and demand forces -- and not excessive speculation -- has driven up oil prices.




"This analysis illustrates that when oil speculators poured large amounts of speculative money into oil markets, prices skyrocketed just as they were hoping ... And when the speculative money got pulled out, prices tumbled," she said.




Sen. Byron Dorgan, D-N.D., said he wants to know "how oil speculators were able to drive prices up and down while the CFTC was asleep at the switch."




An interagency task force, led by the CFTC, concluded in an interim report last July that "fundamental supply and demand factors" influence the oil markets and that the data "does not support the proposition that speculative activity has systematically driven changes in oil prices."




Senate critics of the regulatory agency charged that report was based in flawed evidence.




"The CFTC has its head in the sand," said Rep. Bart Stupak, D-Mich., chairman of the House Energy and Commerce investigations subcommittee.




Stupak said the Masters report shows that that oil prices soared when speculators poured money into future markets even as the federal Energy Information Administration was forecasting supply would exceed demand.




Congress for months has been considering various measures aimed at curbing oil market speculation, but those efforts have been thwarted amid disputes over other energy issues from taxing oil companies to new offshore drilling.




Legislation before the Senate would put limits on the amount of oil certain traders, interested only in speculation, would be allowed to purchase in futures markets and give new authorities and staff to the CFTC to regulate oil markets.

http://moneynews.newsmax.com/streettalk/oil_price_speculation/2008/09/10/129515.html
 

TSR

Well-known member
Oldtimer said:
Yep- just like the former CFTC commissioner testified to Congress months ago- when he also testified that the CFTC commissioners had been told to "take an 8 year vacation" by GW... :roll:
And the father and main drive behind all these law repeals (that had worked for 50 years) to allow rampant unpoliced/unregulated in the dark speculation on energy/oil was none other than McSames #1 economic advisor-former campaign Chairman- and who at one time was touted by the party to be his Treasury Secretary-- "Foreclosure Phil" Gramm..
:( :(

Big Speculators Drove Oil Higher

Wednesday, September 10, 2008 3:09 PM

Speculation by large investors -- and not supply and demand for oil -- were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday.




The report by Masters Capital Management said investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July.




Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said. Oil traded at about $102 a barrel Wednesday on the New York Mercantile Exchange.




"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, calling the amount of money moving into oil futures markets by large institutional investors in the early part of the year "way off the scale."




Masters said its analysis shows investors "began a massive stampede for the exits" on July 15 and that this caused the price decline.




"These large financial players have become the primary source of the dramatic and damaging volatility seen in oil prices," concluded the report.




The report was released Wednesday by House and Senate sponsors of bills to put additional curbs on oil market speculation and comes in advance of a report on oil market speculation expected possibly this week by the Commodities Futures Trading Commission. The commission regulates commodity markets.




Sen. Maria Cantwell, D-Wash., a sponsor of an anti-speculation bill, said the Masters report challenges CFTC claims to date that supply and demand forces -- and not excessive speculation -- has driven up oil prices.




"This analysis illustrates that when oil speculators poured large amounts of speculative money into oil markets, prices skyrocketed just as they were hoping ... And when the speculative money got pulled out, prices tumbled," she said.




Sen. Byron Dorgan, D-N.D., said he wants to know "how oil speculators were able to drive prices up and down while the CFTC was asleep at the switch."




An interagency task force, led by the CFTC, concluded in an interim report last July that "fundamental supply and demand factors" influence the oil markets and that the data "does not support the proposition that speculative activity has systematically driven changes in oil prices."




Senate critics of the regulatory agency charged that report was based in flawed evidence.




"The CFTC has its head in the sand," said Rep. Bart Stupak, D-Mich., chairman of the House Energy and Commerce investigations subcommittee.




Stupak said the Masters report shows that that oil prices soared when speculators poured money into future markets even as the federal Energy Information Administration was forecasting supply would exceed demand.




Congress for months has been considering various measures aimed at curbing oil market speculation, but those efforts have been thwarted amid disputes over other energy issues from taxing oil companies to new offshore drilling.




Legislation before the Senate would put limits on the amount of oil certain traders, interested only in speculation, would be allowed to purchase in futures markets and give new authorities and staff to the CFTC to regulate oil markets.

http://moneynews.newsmax.com/streettalk/oil_price_speculation/2008/09/10/129515.html

NO NO NO Otimer only drilling will lower the prices, did you not hear the Rep' Senators during the debate on C-Span. The word speculation was nonexistenet in their speeches, it was like it was sacriligious to mention speculation. :wink: :lol: :lol: :lol:
 
A

Anonymous

Guest
TSR said:
Oldtimer said:
Yep- just like the former CFTC commissioner testified to Congress months ago- when he also testified that the CFTC commissioners had been told to "take an 8 year vacation" by GW... :roll:
And the father and main drive behind all these law repeals (that had worked for 50 years) to allow rampant unpoliced/unregulated in the dark speculation on energy/oil was none other than McSames #1 economic advisor-former campaign Chairman- and who at one time was touted by the party to be his Treasury Secretary-- "Foreclosure Phil" Gramm..
:( :(

Big Speculators Drove Oil Higher

Wednesday, September 10, 2008 3:09 PM

Speculation by large investors -- and not supply and demand for oil -- were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday.




The report by Masters Capital Management said investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July.




Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said. Oil traded at about $102 a barrel Wednesday on the New York Mercantile Exchange.




"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, calling the amount of money moving into oil futures markets by large institutional investors in the early part of the year "way off the scale."




Masters said its analysis shows investors "began a massive stampede for the exits" on July 15 and that this caused the price decline.




"These large financial players have become the primary source of the dramatic and damaging volatility seen in oil prices," concluded the report.




The report was released Wednesday by House and Senate sponsors of bills to put additional curbs on oil market speculation and comes in advance of a report on oil market speculation expected possibly this week by the Commodities Futures Trading Commission. The commission regulates commodity markets.




Sen. Maria Cantwell, D-Wash., a sponsor of an anti-speculation bill, said the Masters report challenges CFTC claims to date that supply and demand forces -- and not excessive speculation -- has driven up oil prices.




"This analysis illustrates that when oil speculators poured large amounts of speculative money into oil markets, prices skyrocketed just as they were hoping ... And when the speculative money got pulled out, prices tumbled," she said.




Sen. Byron Dorgan, D-N.D., said he wants to know "how oil speculators were able to drive prices up and down while the CFTC was asleep at the switch."




An interagency task force, led by the CFTC, concluded in an interim report last July that "fundamental supply and demand factors" influence the oil markets and that the data "does not support the proposition that speculative activity has systematically driven changes in oil prices."




Senate critics of the regulatory agency charged that report was based in flawed evidence.




"The CFTC has its head in the sand," said Rep. Bart Stupak, D-Mich., chairman of the House Energy and Commerce investigations subcommittee.




Stupak said the Masters report shows that that oil prices soared when speculators poured money into future markets even as the federal Energy Information Administration was forecasting supply would exceed demand.




Congress for months has been considering various measures aimed at curbing oil market speculation, but those efforts have been thwarted amid disputes over other energy issues from taxing oil companies to new offshore drilling.




Legislation before the Senate would put limits on the amount of oil certain traders, interested only in speculation, would be allowed to purchase in futures markets and give new authorities and staff to the CFTC to regulate oil markets.

http://moneynews.newsmax.com/streettalk/oil_price_speculation/2008/09/10/129515.html

NO NO NO Otimer only drilling will lower the prices, did you not hear the Rep' Senators during the debate on C-Span. The word speculation was nonexistenet in their speeches, it was like it was sacriligious to mention speculation. :wink: :lol: :lol: :lol:


Yep- and even tho a majority of the Repubs are aware of the impact of unregulated nontransparent speculation- they followed their leadership to support the Big Oil Boys in the White House and the Big K street investors- even if it meant throwing the people of the country to the dogs.... :(


House Agriculture Committee Chairman Collin C. Peterson of Minnesota released the following statement today regarding the floor vote
on H.R. 6604, the Commodity Markets Transparency and Accountability Act of 2008:

"With the support of more than 290 Members of Congress, including more than 75 Republicans, H.R. 6604 was well on its way to being
passed over the two-thirds vote requirement, sending a clear signal that transparency and enforcement would return to the
commodities and futures markets. Then Republican leadership demanded that Members change their votes in order to protect President
Bush
.


H.R. 6604 is a bipartisan bill that passed the Agriculture Committee by voice vote. It is the product of a comprehensive series of
hearings to examine the issues surrounding futures trading from all sides. And it clearly has enough support to pass this House.
We will continue to pursue meaningful steps to address the conditions that have thrown some futures markets into disorder and hope
that Members will have the courage of their convictions to join us."


The U.S. House Committee on Agriculture web site http://agriculture.house.gov has additional information on this and other subjects.

Here is the bill:
http://www.washingtonwatch.com/bills/show/110_HR_6604.html
 

Sandhusker

Well-known member
They've got to crack down on large scale speculating. If they don't, they're defeating the very purpose for the exchange's existence.
 

TSR

Well-known member
Sandhusker said:
They've got to crack down on large scale speculating. If they don't, they're defeating the very purpose for the exchange's existence.

I agree and if they would by legislation there would be some immediate relief with respect to energy prices. But again, I watched the debates on C-Span and the Republicans didn't want to even mention the word Speculation. Why???? I think we all know.
But you know, as I have stated earlier, I wonder if both partys didn't know the outcome of these debates by the Senate on energy policies before they even started. I have to wonder if it was all an act just to keep things like they are, which probably monetarily benefits most of both partys through those political donations.
 

Mike

Well-known member
Commodities trading, despite the name, has nothing to do with physically bargaining with barrels of oil, but rather betting on the futures of such barrels, which come due when the oil is delivered. "And since no oil is ever held back from the market, these bets do not affect the price of oil any more than bets on a football match affect the result." (The Economist)

The futures market is more an indicator of possible economic direction. If the futures market goes up, there's a good chance that the price of oil will follow. And not because futures caused the market to go up, but rather because demand and current indicators suggested it, and investors used this best information to bet on what would happen. The Economist admits, "The futures market does sometimes signal that prices are likely to rise, which might prompt speculators to hoard oil in anticipation." But looking at the current market, there's no indication this is happening right now.

"But," you may say, "We're still allowing the Enron's of the world to take advantage of the situation!"

The problem is that controlling speculation as a whole is akin to throwing the baby out with the bathwater. "Congress is not, though, just attacking illegal market manipulation; it’s also taking aim at perfectly legal speculation." (The New Yorker)

Moreover, speculation is actually a good thing. It evens out the market and allows producers and consumers alike to hedge their bets against spikes in oil prices that could drive a firm into bankruptcy. The Economist notes that speculation "help airlines and other big oil consumers to hedge against rising prices, and so to reduce risk—a massive boon amid the economic turmoil." Such hedging allows firms to guess more effectively about the future of business direction and stimulates more confident borrowing activity among such businesses. This, in turn, will help the economy and may even reduce the price of oil in the long run.

That's right, speculation my actually reduce oil prices in the long run.
 

Sandhusker

Well-known member
Speculation is part of a healthy market, but speculators are supposed to be minority players. I don't think that is what we saw in oil.

Speculators can drive up any market, that is a given. I don't buy the notion that commodity prices don't have that much of an effect on spot prices. What happens when a contract price is based on the future's price, like so many are? It becomes somewhat of a self-fulfilling prophesy.
 

TSR

Well-known member
Sandhusker said:
Speculation is part of a healthy market, but speculators are supposed to be minority players. I don't think that is what we saw in oil.

Speculators can drive up any market, that is a given. I don't buy the notion that commodity prices don't have that much of an effect on spot prices. What happens when a contract price is based on the future's price, like so many are? It becomes somewhat of a self-fulfilling prophesy.

To me its similar to what the big packers in the cattle market can do. I believe the jury in the Pickens case saw that, unfortunately the judge didn't agree.
 

Sandhusker

Well-known member
TSR said:
Sandhusker said:
Speculation is part of a healthy market, but speculators are supposed to be minority players. I don't think that is what we saw in oil.

Speculators can drive up any market, that is a given. I don't buy the notion that commodity prices don't have that much of an effect on spot prices. What happens when a contract price is based on the future's price, like so many are? It becomes somewhat of a self-fulfilling prophesy.

To me its similar to what the big packers in the cattle market can do. I believe the jury in the Pickens case saw that, unfortunately the judge didn't agree.

Yep, I think you're on the right track.
 

TexasBred

Well-known member
OT...it will be much better when the Messiah Obama gets in..he's already got two economic advisers on staff who are genuis level economist....One is CEO of Freddie Mac (FHLMC) an the other CEO of Fannie Mae (FNMA). What a start for "Change and Hope".
 
A

Anonymous

Guest
mccain-climate-change-jd051.jpg


:lol: :lol: :lol:
 

TexasBred

Well-known member
Come on Oldtimer..post an original thought occasionally are do you liberals never have these "moments"...my grandchildren can cut and paste.
 

backhoeboogie

Well-known member
TexasBred said:
Come on Oldtimer..post an original thought occasionally are do you liberals never have these "moments"...my grandchildren can cut and paste.

He's probably out filling up his tank right now. Not that he has anywhere to go, he's just speculating.
 
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