It will be interesting to see how all this plays out. http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080529/oil_probe_080529/20080529?hub=World
Hah, your last point is spot on. Can we also mention that people were saying it was speculators, when oil was a mere $40 per barrel. Do they still think that speculators have added $100 per barrel to the oil price? Cmon, that is moonbat crazy.
Gartman knows that 95% of commerce that is getting slammed by manipulations of markets from cotton to oil have HAD IT, and are demanding that the regulatory and law enforcement authorities do something about it now, before they go public themselves. I'm talking about companies such as the automakers, textile manufacturers, airlines and even those companies that are doing quite handsomely, such as the railroads. When this breaks, no economist will be able to calculate how much money was stolen from businesses and consumers through outright manipulation of supply data. Gartman is making a very noisy suggestion here because he will look like a freaking genius when commodity markets crash. The slime probably was completely in on it while the manipulation was at its fevered pitch. PEAK OIL MY ASS.
Long trends often end in parabolic price rises signifying the end of the trend. This is one of the most reliable patterns I have seen. Yes, its possible oil shoots up another 20 dollars to 150 or so, but time wise we are nearing the end of the rally. six months from now I would guess were closer to 80 dollars than 150.
Prosecutions Possible Michael Greenberger, a former head of the CFTC's Division of Trading and Markets, said the agency is likely to find that some investment banks, hedge funds and wealthy individuals manipulated futures prices. Traders may face prosecution if they reported false prices or made offsetting trades designed to manipulate the market, he said. ``There will be a lot of administrative and criminal litigation before the sun sets on this,'' said Greenberger, who teaches law at the University of Maryland. http://www.bloomberg.com/apps/news?pid=20601087&sid=aGzRMmD_b9MA&refer=home
Cutten, i have to say that i completely agree with your post. Those foolishly shorting here will furnish the fuel to drive commodity markets back up. I don't expect much retracement in commodities until the Fed begins to tighten, the dollar strengthens significantly and inflation begins to cool down. Right now we are in an extremely inflationary environment. I just don't see commodities coming down a whole lot more in that kind of environment. It is way too early to expect the commodity "bubble" to suddenly burst, but naturally talk of such will bring down markets a bit and furnish entry points for the next wave of buying which will be accelerated by the too early shorts.
smart money is always selling into parabolic rallies. The markets shape the fundamentals not the other way around. This is very important to understand.
James - Help me understand the above comment? The premise being trotted out in is that "index" speculation has skewed price discovery mechanisms in oil markets. My limited understanding is that pricing is typically quoted against a number of commonly accepted "benchmarks" (WTI, Brent, Dubai). Futures markets exist primarily to transfer risk between cash market commercial participants. Spot market transactions are driven by intra-regional price differentials, transportation costs, storage costs, etc. I think the relationship between these variables is much more interactive than being one way purely driven by price alone. All participants are driven by profit motive and their behavior is marginally constrained by regulations. Competition is the only real factor which acts to limit collusion. Please paint your picture of how markets shape fundamentals. To me the core question is whether a significant rise in speculative positions has skewed price discovery or not?
gartman said we'd never see $4 copper again in his lifetime. :eek: that must be gartman's ghost writing the newsletter.
when crude busted $60 or $65, we saw an increase in oil pumped from Canada via pipeline. i think that may have been Spring last year (2007). i know, b/c the well-head discounts on lower quality domestic crude increased as the price increased. basically, you had surplus supply coming to market & marginal producers becoming more economical at higher commodity prices. it doesnt go $ for $ b/c marginal producers truck product to refineries and some use sump pumps to pump oil UP outta the well, so energy costs/transport/ production costs rise. so, we're at $125/bbl - where is all the excess/surplus supply? i suspect the oil trade is a little crowded as a USD hedge - well maybe "little crowded" is an undertatement.... or maybe the huge surge caught unhedged businesses too exposed and at the end they had to commit? i heard that only one airline other than LUV hedges jet fuel costs - thats crazy.