CFTC prepares crackdown on speculators

[AAAintheBeltway]

Quote from fkbsuhites:

Let me take a wild guess. You voted for Dubya 3 times.

The fog of retardation is readily apparent.

Apparently the fog is thick enough to where you fail to comprehend the difference between malicious speculation and normal market hedging by producers and end users.

According to your half witted theory, GS should be able to buy the entire Sorghum production of Mali, hoard the harvest creating a artificial food shortage and driving up prices, lock in future contracts at exorbitant prices and then once the contracts are in place,go short and flood the market.

There is a reason some countries have the death penalty for food hoarders. We should apply the same medicine here and with people like you.

You imbeciles confuse efficient markets with inefficient market manipulation.

According to your foggy retarded brain, the Hunts should also have been able to savage the silver markets a decade ago.

You are the kind of clueless idiot who probably thinks rent control is a valid way to deal with housing shortages. Ever notice which countries tend to have the death penalty for hoarding? Basket cases run by the sort of socialist fools we now have in charge. No doubt obama and his buddies will mount some sort of demagogic war on evil speculators here to distract voters from their miserable failures.

The logic of your position is that the govenrment shosuld impose price controls on the necessities of life. Otherwise, evil speculators and hoarders might drive the price to an "unfair" level. We tried that in the '70s and we got gasoline rationing, lines around the blcok and a moronic national 55MPH speed limit. This time I'm sure it will be even worse, as obama controls the national media and is supported by an army of ignoramuses like you.

 

[day4night]

I'm pretty much with Landis here. No reason investment banks should be considered "commercials," let alone ETF's. The swaps loophole needs to be eliminated.

This move in crude was coming anyway. It may be exacerbated by the regulatory news, but we're at the top of the year, gasoline had already turned over, over-played fears of an inflation crisis have faded (inflation would take more time to develop), and the normal rebound from the winter lows after the plunge from pre-Lehman days has happened.

I fail to see anything abnormal about these moves. A rebound after a huge drop -- nothing special here, esp considering the contango, itself partly a view on longer term supply/demand issues. Commodities leading a perceived economic recovery -- normal. In fact the mood was that rising oil was good because it showed evidence of economic activity. It might end up being that commodities rise with BRIC shares rather than ours, btw.

The biggest problem however is that there won't be enough oil produced for a real economic expansion. That's the real story, or at least the real threat.

The big question not asked:

Why didn't the multi-year rally into 2008 bring out more supply? Or more discoveries?

If you were an oil producer who made oil for $30/barrel, would you really hold back the flow when oil was over $100?


That said oil as an inflation hedge is problematic. The herd thinks monetary/credit inflation is coming, so they buy oil, pushing up oil prices, thereby causing higher prices for most goods. Talk about self-defeating... A kind of "tragedy of the commons" even if the "reflexive" rise is temporary.

Also, since ETF's are concentrated in the front month they don't do much for real hedgers...

 

[day4night]

Quote from AAAintheBeltway:


... We tried that in the '70s and we got gasoline rationing, lines around the blcok...

Actually it was the peaking of US oil production in the early 70's that gave previously unknown pricing power to the oil exporting countries who formed OPEC.

Anyway the Obama administration isn't talking about shutting down the futures markets. Obama's a capitalist too. Government is FORCED to take an increased role in the economy after a credit collapse. Otherwise it's Hooverville time.

The Republicans did more to increase oil prices by giving lavish subsidies to buyers of gas hogging SUV's as a back-door protectionist measure for the US auto industry. SUV's caused a 20% increase in American gasoline demand.

REAL long lasting "manipulation" comes in the form of cartels, wars, gas subsidies and so on.

 

[sprstpd]

Quote from AAAintheBeltway:

Bottom line is, it is not easy to draw the line between investing, trading, speculation and manipulation.

One other point is that manipulation always produces very good trading opportunities. If people are complaining that oil is ridiculously high at $140+, why not short it and make an enormous profit off the stupidity of others? As a trader, I would much rather have less regulations than more.

 

[Landis82]

Quote from AAAintheBeltway:

This time I'm sure it will be even worse, as obama controls the national media and is supported by an army of ignoramuses like you.

Actually, the only real ignoramus on this thread is YOU. You obviously had zero clue that investment banks have been classified as "commercials" by the CFTC in the energy markets.

Thanks for stopping by my friend.
Maybe you should stay inside the "Politics & Religion" forum and not venture out . . . that way, you might not look as ignorant as you really are.

 

[AAAintheBeltway]

Quote from sprstpd:

One other point is that manipulation always produces very good trading opportunities. If people are complaining that oil is ridiculously high at $140+, why not short it and make an enormous profit off the stupidity of others? As a trader, I would much rather have less regulations than more.

Exactly. Oil and gas producers were selling production forward big time and drilling like there was no tomorrow. Of course, Obama and low pricers stopped that drilling and we will be seeing the effects soon. Gas wells, particularly in shales, tend to trail off pretty severely after a year or so.

 

[Ivanovich]

If you Hatfields and McCoys continue to bring politics into this and turn it into a flame war, I'll toss this thread into the political forum cesspool where it belongs.

 

[day4night]

Quote from AAAintheBeltway:

Oil and gas producers were selling production forward big time and drilling like there was no tomorrow.

And yet oil production failed to increase. Most oil producers are in decline. New wells aren't big enough. Production seems to be peaking.

 

[Landis82]

Quote from AAAintheBeltway:

Exactly. Oil and gas producers were selling production forward big time and drilling like there was no tomorrow. Of course, Obama and low pricers stopped that drilling and we will be seeing the effects soon. Gas wells, particularly in shales, tend to trail off pretty severely after a year or so.

Once again, you show that you have no idea what you are talking about.

Gas production in the shales such as the Marcellus, Bakken, Barnett, and Haynesville is dramatically higher given the newer drilling technologies (horizontal drilling) that are currently being used.

Helmrich Payne (HP) is one of the biggest in the business given their fleet of "Flex-Rigs" which first came into the gas fields in the late 1990s.

They are so much more efficient and productive that fewer rigs are needed to accomplish the same production task. In some studies, horizontal drilling is shown to be TWICE as productive as normal vertical rigs. In the Barnett Shale, horizontally drilled wells in 2008 were shown to be THREE times as more productive than the average 2006 US land gas well.

http://drillingcontractor.org/index/index.php?option=com_content&task=view&id=479&Itemid=1


http://www.hpinc.com/

 

[Pa(b)st Prime]

Agriculture futures have relatively small position limits for speculators and are strictly enforced. Of course hedgers are allowed to trade much bigger but only on a petitioned as needed agreement. Some of you may remember in the late 80's when Ferruzzi, a large Italian commercial attempted a Soybean corner under the perusal of excessive hedging. The CBOT placed a forced liquidation order and in the aftermath Ferruzzi blew out!

Yet even with such limits and oversight: I can think of a half dozen markets that had 5-1 gains over the same period as crude. And as we all know, the rise in commodities when priced in foreign currencies was much, much less extreme than in dollars. In fact a 5 year oil chart is virtually 100% correlated to the Brazilian Real.

Given the sheer size of the market-and the ax of the Gulf states-I'm completely dismissive that oil was unduly squeezed. OF COURSE there were huge speculative longs. But that's the nature of the beast. Were those longs able to "corner" nearby oil like you could in winter wheat? Give me a friggin' break. Ask Amaranth what happens when you risk going 1 on 1 in the open interest with an equally financed yet better skilled trader. Most squeezers ultimately get squeezed.