What gets me about traders who want to scream manipulation is that if you know prices are being manipulated up, simply buy and profit off the backs of the manipulators. Sooner or later they will get burned by their own game.
That was an excellent 60 Minutes segment. I imagine that every thinking person suspected a speculative element in the price run up, but the size of this run up in the face of increasing supply and decreasing demand?! And Morgan Stanley's participation in the physical product made me feel uneasy and more than a little pissed off. Was there some old-fashioned cornering going on?
I believe you're missing the point. What about the people who wanted no part of this game but got screwed over just the same?
Exactly right. What about all those people out there - average citizens - that were hurt by the speculative rise in oil? Factories? Small businesses? Heating prices? Fuel? All because some greedy bastards wanted to see how high they could push it.
Here's something that poor pathetic people like you don't take into account...that the price of oil has corrected. That's right- $38 last time I looked. The market worked beautifully, and the price corrected. Why did the price spike? I'm no closer to knowing the answer to that than I was before that foolish report by 60 Minutes. I do know this- Oil was over priced and the market corrected the price of it. Not Enron, not Chevron, not Morgan Stanley. Often times, it's just easier to blame your own failings as a trader on SOMETHING...it could NEVER be your own ineptitude...no, never... Best of luck to you... I'm glad there's people like you out there trying to trade...makes things so much easier for the rest of us.
I think that a number of posters continue to miss the point. They appear to believe that traders must necessarily be amoral as a matter of course. I don't think that need be the case. I like to ride a price move as much as the next guy, and I don't trade oil so I didn't have a horse in this race. I also like money as much as the next guy, but I prefer that it be clean. What appears to have been blatant and egregious manipulation at the considerable expense of many has a decidedly grimy feel to it.
I tend to agree with the analysis of this writer: Markets are anticipatory, so the current prices tend to reflect expectations, not current reality. Investors (or speculators, if you prefer this moniker) prefer to hold and to bet on physical assets when they expect high inflation. When the fed turned on the liquidity spigot, they saw inflation, and piled into oil futures creating a speculative frenzy. When it turned out that the money spigot was just barely keeping up with the drain, they dumped oil and other commodities, creating a burst bubble. My guess (and that's all it is) is we'll see oil in the $45-$75 range for much of the year. If it looks like reflation will succeed in a big way, my guess is that oil will go over $100 pretty quickly. If it looks like the economy will be mired in recession for a while, we may see it at $25.
That's all well and good, but I still have an uneasy feeling about Morgan Stanley having had such an active hand in the physical commodity...
The consumer is a part of the market just like specs, they can also be greedy and hoard supplies, and they benefit when the market goes very low. There is no such thing as a right to low oil prices. The only reason this market may have been susceptible to manipulation is that is was tight to begin with.