Good article. I know I'll get flak for this, but rampant speculation has got to stop when markets get taken to the extreme like this.
Speculation cuts both ways. When prices go down they could eventually go down a lot faster and farther due to speculators being hurt, bailing out or shorting into a decline.
You are certainly correct. And in that case, it should ALSO be curbed. Commodities should be based on supply and demand fundamentals as much as possible. It'll never be perfect, but it's FAR from that now. And the down moves in speculation are far, far shorter in duration than the up moves. Hence, the pain in causing prices to rise is usually much longer than the relief from the down move.
Morgan Stanley, Goldman, JP Morgan, UBS.......they are probably the ones most responsible for the rise in oil prices as was stated in the article in the first post. The comment by Goldman saying that the price of crude would hit $150-200 and then comments such as below by Palma of UBS only contribute to higher oil prices (which is what they are hoping for)and higher prices at the pump. Jeffrey Palma, a New York-based strategist at UBS, lifted his recommended allocation of global oil stocks to ``a modest overweight.'' The recommendation means investors should hold more of the shares than are represented in benchmark indexes. ``The sector appears notably inexpensive,'' UBS analysts wrote in a report to clients. ``The majors offer compelling value, particularly in view of our higher oil price forecast which we expect the investment community to gradually incorporate in forecasts over the next few months.'' Chevron trades at 10.6 times earnings and the S&P 500 Energy Index is valued at 13.4 times earnings, compared with the S&P 500's valuation of 23.5 times profit, according to Bloomberg data. ``We can't see oil falling below $100 from here and it's time investors accepted triple-digit oil and started positioning portfolios accordingly,'' said Dominic Rossi, head of international equities at Threadneedle Asset Management Ltd. in London.
maybe the government should step in on anything that goes up or down too fast and that trades too "irrationally" in the market. by your thesis you would prevent people from hedging their inventories when they see a major fundamental change happening to a commodity.
Robbie, the gov has stepped in. Read The Jerusalem Post today and see what georgie is up to. regards f9
There's a difference between hedging one's inventories and jumping on a bull run for a quick buck at the expense of the greater world's population.
Unless you operate a refinery, why the hell are you buying oil futures contracts? Oh thats right, you are a strategist at JP Morgan Chase, and you "speculate" that the price of oil will rise, so to insure your annual bonus, and grease up the portfolios you over see, you are buying mm's of oil contracts. What an outstanding example of a human being you are; your parents must be so proud, your friends so envious, and your children (and grandchildren) so fortunate to have a leader such as you.