Quote from dougcs:
To a lesser extent the derivitives, mainly heating oil, jet fuel and gasoline, are also global and the global market sets the price.
Quote from krazykarl:
the oil market _cannot_ be manipulated to the degree you are implying, it is too large. no, not even the US govt can manipulate it with a war....
You two could not be more wrong.
The derivative markets behind any REAL commodity are exponentially higher than the actual supply. The numbers are out there to show it. If the derivatives were all exercised, even out of money, there would be financial chaos.
It was also proven by this one hedge fund head 5-6 years back. I really need to look up the info but it's a true story. He had some out of money calls on gold, a lot of them but the loss was not significant. So he said, WTF, lets exercise them. He ended up making a ton of money, cause the supply was not actually there.
Oil is heavily run by derivatives. What tricks most "experts" is the fact that most clueless players rely on the global supply data to make their bets. So the price seems to resemble the reality, but truly it's all a bunch of BS that is easily manipulated by paper pushers. Price is a very important component as well, it can be manipulated to ramp up supply and then pushed down for a period of time to accomplish whatever goals. By the time the reality comes to surface, it doesn't matter.
If you think I am wrong, check the data. What the hell do you think Greenspan kept trying to hint at with his doublespeak on derivatives. Look through history and ask yourself, why were derivatives always outlawed during a bubble bust that turned into financial chaos.
Like the saying goes "the market can stay irrational longer than you can stay solvent", "The market is never wrong". True in the context of our current financial system. Once the Market is truly wrong, you will have much bigger things to worry about than showing that you were right.
