http://money.cnn.com/2008/04/03/news/economy/senate_oil_prices/index.htm?postversion=2008040315 Curious - does anyone think this will work to help lower oil prices?
I haven't read it yet, but does that mean that they will lower margins if the price is too low? I love free markets!
Won't change things one bit - middle eastern "oil wealth" trading operations will still have the ability to play oil whichever way they want - they are MUCH bigger than the pit/electronic traders here in the U.S. - and the U.S. government already knows this but NEVER talks about it, so they know the move would be PURE political window dressing (almost too funny how they wait until AFTER we are already trading levels ABOVE $100/barrel to come up with this BS) - HAHAHAHAHAHAAHAHAHAHAHAAHAHAHAHAHAA!!!!!!!!!!!!!!!
No, at least in the long run. The roots of the money tree need to be chopped down to cure the cause of higher oil prices, etc. http://www.elitetrader.com/vb/showthread.php?s=&threadid=120910 Speculators may fuel the boom but the supply needs to be cut for prices to go down. The supply of money that is. The congress and senate (99%) haven't a clue what causes higher oil prices, and if they do, they encourage it because special interest groups are providing perks for their support. http://mises.org/story/1956
The more the government sticks their nose in it the worse it will get. Government intervention usually just makes the condition last at least twice as long as it normally would. I love how Congress is so quick to pin the blame on oil companies and evil speculators but the condition in the oil market has much more to do with the systematic debasing of the dollar, out of control deficits, Iraq, Iran, etc. which is squarely the fault of Bush AND Congress. This is probably a bullish signal if anything else.
Everybody is right in this thread. Oil is a global commodity and is a Physical commodity. weak dollar accounts for about a third of the recent record run in oil prices, another third on geopolitical uncertainty and the rest on supply/demand and market speculation. The NYmex made a deal last month with the The London Clearing House Limited and Clearnet. NYMEX and LCH.Clearnet Announce Historic Clearing Alliance. Futures and derivatives clearing house LCH.Clearnet Ltd will clear a range of NYMEX over-the-counter and futures products under an agreement with NYMEX Holdings (NMX.N: Quote, Profile, Research) unveiled on Thursday. NYMEX, the parent of the New York Mercantile Exchange, will offer oil contracts, including West Texas Intermediate, Brent and gasoil as well as natural gas and electricity contracts for clearing through LCH.Clearnet, the two groups said in a statement. The contracts are expected to begin trading and clearing in mid-2008, pending regulatory approval. They will be listed for trading on the CME Globex electronic trading system and the NYMEX ClearPort. The alliance will save users money via margin and other capital efficiencies as well as give them the ability to trade virtually 24 hours a day, Richard Schaeffer, NYMEX chairman said in the statement. NYMEX offers futures and options trading in energy, metals and soft commodities. LCH.Clearnet is owned jointly by users, exchanges and also Euroclear, a settlement system for domestic and international securities transactions. LCH.Clearnet serves international exchanges, markets in equities, exchange traded derivatives, energy, the interbank interest rate swaps markets and certain euro and sterling bond markets. NYMEX is currently in talks with CME Group Inc (CME.N: Quote, Profile, Research), the world's largest derivatives exchange, on the CME's potential acquisition of NYMEX.
Just so you know (and actually not to disagree with your comment), you lose some credibility when you start pasting those Mises links in your messages. I'd advise you make your point and possibly cite from another source. You might as well post Youtube Zeitgest links, or better yet 9/11 govt conspiracy website links.
Higher maintenance margins would shake out the most-undercapitalized traders in the short-term but the market would rally back.
More North American Myopia. WTI and Brent Crude trades on IPE/ICE in europe on very decent volumes. Unlikely Congress could force them to jack up margin too?? So all the specs would just move over to that contract instead. And if large volumes transfer over there it would mean NYMEX will no longer be the main liquidity for pricing WTI.
This is my assessment too. It makes no sense to drive business away from American exchanges; it also predicates long term damage to American exchanges as free markets if political interference is sanctioned. The CL contract would have its liquidity reduced to the detriment of all users of this market. And finally who says that the OPEC cartel cannot use their weight to keep price very high on the oil markets?