Congress testimony today. I told you this long ago but you 'free market' knows all geeks rolled over a long time ago. Kick out the speculators and let them trade pink sheet scum. This notion many of you have that all markets are healthy, and no amount of gambling is too much is assinine. This guy Masters got it right.
1) Without speculators how could you hedge? 2) What makes you think that ending speculation would result in lower prices?
For fuck's sake.. it's not about ENDING speculation.. it's about regulating the markets to stop corners from occuring.. That is NOT being done right now..
PohPoh, aint it amazing how many assholes there are in the world, who are even now being buggered and think its just a french kiss? I'd like to see the manipulators take it to $500 per paper barrel, and watch these monkees bleed to death. "Hey Mabel, look up 'free market' in da Websters, I think maybe we been porked"
Without Speculators there would be no market. Have you heard of a thing called liquidity?? There may have to be more regulation, but without speculators there would be rampant corruption. The big banks and financial firms would control everything. If this market is being artificially pumped up it will eventually collapse. All "greater fool" bubble markets pop sooner or later. They have to by definition.
I have no idea who this guy is, but he is very very wrong in this regard. http://www.mcadforums.com/forums/files/michael_masters_written_testimony.pdf
Do you really think that oil at $140 is any more absurd than oil at $9 as it was in 1999. The same dicks that were preaching the end of oil and the oil producing countries are now the loudest propenents of this Peak oil bullshit. For your guide the first proclaimation of Peak Oil came in 1925 with similar proclaimations coming on a fairly regular basis includuing the Classicly poor CIA assesment in 1975 and they are continually followed by periods of overproduction and collapsing prices. Oil is simply a trading commodity thats price responds to to changes in supply and demand both real and percieved and at times this gets overplayed but eventually supply and demand will come back into line.
1) Read the testimony before you express an opinion or ask questions. If you actually bothered to read the testimony, you would have read about the distinction between traditional and index speculators. Traditional speculators both buy and sell futures, the index speculators buy and hold, actually draining market liquidity. He was talking about a new group of investors which has entered the commodity markets and thrown everything out of whack. Go to any decent prop firm, hedge fund, or bank and talk to the traders there and they'll tell you the same thing this guy was talking about, because we've all been saying it for a year. This is a new influx of money from institutional investors, and it has the commodity markets all out of whack. Of course, this hurts the stock market and Masters is from an equity fund, so caveat emptor. I believe, however, that he is right.
I'm repeating myself, but John Corzine, the ex-CEO of Goldman Sachs said recently that it is speculation that has driven oil to where it is, not supply/demand. He knows more about markets than anyone on this website.
You and your hedge fund buddies don't completely get it. I'll concede indexing has boosted commodity prices. Hell even GLD squeezed metals. HOWEVER at inflection prices, i.e. prices far above value (as defined by commercials at spot) the supply from producers would friggin' overwhelm the funds. I've made this point on other threads. If the Saudi's TRULY believed oil "should be" $60 a barrel they would hit every back month bid until it got there. The Saudi's would view these funds as a heaven sent once in a lifetime opp to sell future inventory at unrealistic prices. Funds be damned. Funds be toast. So where's the selling? Presumably OPEC sellers aren't emerging because their oil is spoken for. Meaning oil prices ARE NOT disconnected from supply/demand/price reality. At this moment at least. For all I know OPEC IS hitting bids and this stuff cracks wide open.