trading at 96 when he posted it ,dropped 5 points since into exp,coincidence or a great read,when looking for the original story he drew from,reading this phil davis, he's a pretty smart guy
Alright let's walk through this, conspiracy theories aside. All the monthly strips are trading at .30 to the tick through the end of the year. The calendars trade at a significant liquidity to the outright market. You can move all the size in the world right now by selling the Sept/Oct strip for .30. Next, all the 2011 strips are in contango!!!!! When specs are getting squeezed the market is not in contango, it goes into backwardation and they blow out the front end of the curve. This is NOT happening. In fact, the curve is very smooth and quiet and trading in perfect alignment. If someone wanted to move 1 million contracts right this minute at midnight, they could execute the trade in one second with Phibro giving them a tick or two in edge on the strip. Nobody is "trapped". The oil market is driven by the physicals, not the futures. The physical market dwarfs the futures by magnitudes. There is more then enough liquidty in the cash market to accommodate any spec. This is not the Hunt brothers corner of silver in 1979. The physical supply of oil currently around the world is huge. The physical players will lay off anything in the futures market in a second with the slightest bit of edge. The main driver in oil right now is Brent, not WTI and the Brent/WTI spread is very heavily traded as well. The oil market is probably one of the hardest markets in the world to manipulate because of the liquidity in the cash market and the fact that nobody has a monopoly on supply. There are a lot of factors driving crude. QE, geo-poltical risks, the dollar, and the distillates.
not pretending that i understand half of that but in 08 when we hit 147,you don't think that was manipulated by speculators,be civil,i am trying to learn here
We went into massive backwardation on that blow off top. All the spreads blew out. The volatility got so big on those strips that they were trading like outrights excepts firms had on 1000 times the size as those strips usually barely move. When those spreads blow out, you see massive carnage. The back months barely moved on that spike. It was insane volatility. No, it was not "manipulated". It's just something that happens with regularity in the commodity markets. Were there firms that forced that squeeze into backwardation? Sure. That's a consequence of that market. The guys that sell those spreads to collect some carry are synthetic naked put sellers picking up nickels in front of a steamroller. When they get blown out, it gets ugly. Same thing happens in all the commodity markets.
Hey Ammo you may want to check out a book called "Oils endless Bid" if you trade crude at all you should find it a good read. http://www.amazon.com/Oils-Endless-Bid-Unreliable-Economy/dp/0470915625