Traders Blamed for Oil Spike CFTC Will Pin '08 Price Surge on Speculators, in a Reversal From Bush Findings "The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors. In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday. The CFTC's new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility." http://online.wsj.com/article/SB124874574251485689.html
I think the gov't should apologize to the families of the people who have since died and believed it was supply and demand.
Oil has been the 'new gold' for the past few years - a proxy for money. Just thinking about implications ...
This "finding" will change how the futures markets operate. Get ready for a Pattern Day Trader-type rule for futures.
I remember a ton of people here rejecting the conclusions of Masters and his testimony to the U.S. Congress. It was painfully obvious to anyone at the time who had their eyes open that speculators were the catalyst for volatility of oil prices, as Goldman & their ilk put on long oil trades, while simultaneously rigging terminal manifests, and hiring supertankers to store oil offshore, ensuring t would never reach the Cushing, OK terminal (and others). That episode in American History, where speculators rigged prices, and the free market was 'dissed' (i.e. natural supply & demand pricing was thrown out), severely damaged the U.S. economy, with oil peaking at $147 per barrel.
Yawn. You still have zero proof of any of this. So what if specs bought spot oil and stored it? Is that illegal? Should it be? This report is obviously politically tainted. Democrats wanted villains to justify more government control over the markets. I know, big surprise. What do they not want more government control over?
There's overwhelming proof. http://hsgac.senate.gov/public/_files/052008Masters.pdf You have about 1/500th of the knowledge, experience or credibility of Michael Masters.
Very true. But that doesn't prevent the ET Clown of Reason posting his drivel about something that he has absolutely no clue about. To "AAA", people like Phil Gramm are heroes. "AAA" posted on this subject earlier this month, with his usual political bias entering the fray: http://www.elitetrader.com/vb/showthread.php?s=&postid=2495488&highlight=commercials#post2495488 And looked like a total FOOL doing so.
Masters reached the wrong conclusion in his paper. His point that 'index speculators' or the buy-and-hold PMs have driven up oil prices is simple enough. But then he jumps to the conclusion that "Index Speculators provide no benefit to the futures markets and they inflict a tremendous cost upon society. " The conclusion is simply false. Funds are buying and holding oil long-term because they recognize there is a growing supply-demand imbalance. (I'm talking long-term folks, as in years.) By bidding prices up now, these 'index speculators' press us to seek out alternatives to oil EARLIER, thus avoiding an even worse crisis down the road. Halleleuia! (sp?) It is good for society, the planet, that oil prices are higher than only physical supply-demand would suggest.
I'm cherry picking and selecting a particular portion (the above one) to ask you a serious question. Is it possible that your admitted bias (i.e. that high oil prices benefit society and the planet) affects your objectivity as to whether speculation and manipulation drove oil price beyond where the laws of supply & demand in a truly free market should have dictated?