70% of WTI outstanding = Speculator Positions

Discussion in 'Energy Futures' started by scriabinop23, Jun 16, 2008.

  1. Saw this on tradethenews tonight:

    Today 07:29pm
    Oil: According to data released by the head of the Senate's Energy Committee, speculators hold close to 70% of all of the outstanding WTI oil contracts
    - The data is from the CFTC.
    - (reminder from 6/12) CFTC and FSA reportedly look to set limits to front-month WTI front month contracts in ICE futures Europe - unconfirmed report

    We all knew noncommercial = IB spec positions...

    Anyone have any news clippings w/ more details on this?
  2. Unless I'm mistaken, this pretty much blows the 'supply&demand' argument for high crude oil prices out of the water.

  3. My only curiosity is why I can't find this clipping on any of the mainstream media outlets nor the Senate energy committee website. I'm wondering if this is somehow a recycle piece of misinformation or we'll see a deluge on it in the next day or so.

    Since (I believe) we live in a world where there's so much more money for a group of funds to be made by getting into a position, calling up a friendly contact Nigerian militant group and requesting some 'unrest' for a small fee of a few million dollars, then banking hundreds of millions on the trade... it would make sense that news like this is supressed for a while.
  4. Oil bulls rage at me for suggesting such notions, but I agree 100% with you.

    I know of no other commodity that has the price driven up by the mere mentions of, for example, "we're entering hurricane season."

    Don't we have a hurricane season every year, aren't there years where there are no hurricanes, and aren't there years where there are a few, a fe more, or even a fair number of hurricanes that do no damage to infrastructure?

    But yes, the lack of Royal Dutch Shell, with its literal mountain of cash, to secure its Nigeria Delta Platform and pipeline from rogue elements of Nigerian Bush Ninja's, who seemingly randomly kidnap platform workers, phone in threats, and sometimes throw objects at the cast iron pipes, hence causing crude futures to rise a few dollars every so often, takes the cake.
  5. styron


    According to the CFTC data, speculators are long 290383 contracts and short 276448 contracts.

    So of the 566831 contracts held by speculators, 13935 are net long.
  6. Does it take options trading into account? :confused:
  7. styron


    Yes, that data includes both futures and options contracts. It can be found at the cftc.gov site.
  8. WTI Trades on the ICE platform. The ICE is not regulated like the NYMEX.

    " One huge problem area: A growing share of the business of trading U.S. contracts for crude oil futures on U.S. soil is conducted on U.S. computer terminals that are operated by foreign-owned exchanges that are not required to conform to U.S. regulations. This is known as the "London-Dubai loophole." Although ICE is based in Atlanta, it is considered by the CFTC to be a U.K. entity, and thus falls under the regulatory supervision of the Financial Services Authority of the U.K. But since ICE therefore does not have to report the positions that U.S.-based traders are taking on U.S.-delivered contracts of, for example, West Texas Intermediate sweet light crude, the exchange has a competitive advantage over regulated U.S. exchanges such as the New York Mercantile Exchange (NYMEX). In response, observed Greenberger, NYMEX has scrambled to set up its own joint venture with the Dubai Mercantile Exchange (DME), so that it too can get a piece of that action. The joint venture, amazingly, is considered to be under the regulatory authority of Dubai. "

  9. I don't think it does. Even if 100% of the open interest in future contracts is held by 'speculators' that does not mean the spot (underlying) price is not determined by 'true market' supply and demand dynamics.

    If future prices were out of whack with the spot market then a risk free arbitrage opportunity would present itself - a big commercial oil company could e.g. hit all the crude bids on the future exchanges if it thought future prices are 'way too high' compared to its own production cost metrics.
  10. Fishbird


    Speculators dont drive markets. They provide liquidity.
    And the usuall small trader is shorting uptrends because it looks too high.

    Unless we have a very tricky cornering here, this all doesnt make sense.

    Maybe the chinese are more trendfollowers and like to spike a market.
    #10     Jun 17, 2008