When was the last time when a big oil CEO was honest? Oh yes, a few week's ago when one of them acknowledged peak oil: "The upper limits of global oil supply may be approaching faster than expected, according to Christophe de Margerie, Chief Executive of French oil major Total. After raising the specter of a 100 million barrel per day barrier to production growth at last year's Oil & Money Conference in London, de Margerie suggested during a workshop at Total's Paris headquarters on Monday that 95 million b/d might be a more realistic limit."
Isn't lying under oath illegal? The equilibrium price is whatever price it takes to keep demand down to match production levels. That translates to: correct price for oil = whatever it takes to keep americans/europeans off the roads. Don't believe me? Ask the CEO of BP. According to the oil producers' cartel Opec, the blame lies with speculators in the international markets. But Tony Hayward, chief executive of BP, describes that view as "a myth". http://news.bbc.co.uk/1/hi/business/7449781.stm
lets get a little balance into the debate from the cftc themselves http://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/cftcfactsheet062308.pdf from the factsheet: "Traditional speculative positions (in this case, âspeculatorsâ minus the swaps dealers positions) include long and short positions â in fact, there are almost as many short speculative positions as there are long positions." if you look at speculative open interest, its about 4% long.
Don't confuse them with facts. It has become desperately important for the Democrats to blame specs for high oil prices. Otherwise, someone might start asking who voted against every form of viable energy, who is against new domestic production and who elevates the concerns of global warming alarmists over consumers. Now we have OPEC joining in and laying the blame on specs. The media reports it as fact. Let's see, who has more control over price, the global cartel that controls oil producution or a handful of traders? What about corn? Why no concern that evil specs have driven up the cost of a basic foodstuff? Maybe because the argument is even more ridiculous there, since everyone can see that the government's idiotic ethanol policy is to blame. What about steel and iron ore? I just saw that China agreed to let the australians raised prices 96%. Nearly doubled? Evil speculators again no doubt.
Oil is a strategic commodity vital to the US military since the Civil War, The United States will go to war over oil - Carter Doctrine. http://www.youtube.com/watch?v=7loLxor-Hsg&feature=related
Spec open interest in Crude Oil is now up to 71% of total open interest right now. Compare this to only 30% back in 2000. Not too surprising, given the fact that we now have upwards of $185 BILLION in managed futures accounts! :eek:
Which proves what, exactly? This is a chicken and egg problem. Which came first, specs or fundamental changes in the oil market? Do you people think a bunch of oil traders just got together one day and decided to run up the price? Or maybe people began to notice that demand was increasing worldwide and supply wasn't?
Yeah, actually - though maybe it didn't occur quite that simply. Look at alternatives. Equities - sucking. Real estate - in the toilet. Commodities? Raging bull market led by a lower dollar - and plans for the dollar to go even lower followed by lower US interest rates. If you ask me, that's exactly what happened. Funds saw the writing on the wall and jumped on board. They'll ride it to the sky until it pops just like they do everything else.
Excellent Commentary , Ivanovich Ivanovich wrote.... Yeah, actually - though maybe it didn't occur quite that simply. Look at alternatives. Equities - sucking. Real estate - in the toilet. Commodities? Raging bull market led by a lower dollar - and plans for the dollar to go even lower followed by lower US interest rates. If you ask me, that's exactly what happened. Funds saw the writing on the wall and jumped on board. They'll ride it to the sky until it pops just like they do everything else. ...................................................................................................... Exactly right ....money always follows performance...... and the money will pile into whatever it is until it pops....that is absolutely correct..... It happened with professional money managers....people look at performance and make a choice.... They do not choose for any other reason.....people do not buy stock based assets on sale.....never will.....because a recent negative story scares the hell out of them.......exactly when they should be buying....ie a management style out of favor.... ................................................................................................... However if something has to be done......oil can be treated as if it were a hot thinly traded stock...... Let's say a stock with a thin float was trading at $10 and 10 to 1 leverage was readily available..... The price would drop like a stone, if the price was changed to $5000 with no margin..... This is really not that complicated....Brokergae firms change margin limits all of the time..... The answer should be a moment of regulation on trading until more normal times exist.....then allow for a more normal flow.... And true, the loophole should never have been allowed.... Graham should be slammed in prison....Note how Texas based names are all over this....Oil ring a bell....