So when are we going to stop allowing casinos to determine the price of gas and food?
- Thread starter travelingtrader
- Start date
And if our humble efforts...
...should bring us an award...
...we would not refuse it...
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Speculators can only drag prices away from fundamentals for a limited time and to a limited degree, mainly because other speculators will take the price the other way when things are too far out of fair value.
Speculators are used as a scapegoat for other peoples (politicians) mismanagement. Specifically at this time grain prices are high because some bright spark thought it would be a good idea to use food crops as fuel without thinking through the consequences. Oil is up because Iran will not cease enrichment of uranium and the UN doesnt have the will to stop them. Israel has stated that they will stop them, therefore they will, by military action in the near future.
We are all "speculators" on here and giving politicians an excuse to poke their noses into any futures market eg oil is bad news , it might be the S&P next. I dont want my legs cut off with bloody great hikes in margin or trading restrictions.
Speculators are used as a scapegoat for other peoples (politicians) mismanagement. Specifically at this time grain prices are high because some bright spark thought it would be a good idea to use food crops as fuel without thinking through the consequences. Oil is up because Iran will not cease enrichment of uranium and the UN doesnt have the will to stop them. Israel has stated that they will stop them, therefore they will, by military action in the near future.
We are all "speculators" on here and giving politicians an excuse to poke their noses into any futures market eg oil is bad news , it might be the S&P next. I dont want my legs cut off with bloody great hikes in margin or trading restrictions.
Whacha talking about, today was a great trading day. How often do you get oil up 8% and the indexes down 3%. I have wet dreams about shit like this, the more speculators or aliens or who ever the hell trades the better.
The short from the open then hold strategy was a gimmee today. I closed the PC a little early, but nonetheless today was a very sweet day. Any decent trader was shorting all pops.
The short from the open then hold strategy was a gimmee today. I closed the PC a little early, but nonetheless today was a very sweet day. Any decent trader was shorting all pops.
"We need a system where actual demand from actual consumers and actual supply from actual suppliers are what determine price."
blah blah blah, you imply that you know this is true. Let's do a little exercise, take a minute and pretend that this has nothing to do with unwarranted speculation and hedge fund games, imagine that just maybe this is driven entirely by demand.
Your problem is that demand has not gone down regardless of price, oil is searching for that price, and until actual world demand slows, the price will keep going up. The market is telling the producers that oil is worth much more.
Not only that, but just maybe opec knows they must keep demand from increasing too fast because they don't have the supply!
blah blah blah, you imply that you know this is true. Let's do a little exercise, take a minute and pretend that this has nothing to do with unwarranted speculation and hedge fund games, imagine that just maybe this is driven entirely by demand.
Your problem is that demand has not gone down regardless of price, oil is searching for that price, and until actual world demand slows, the price will keep going up. The market is telling the producers that oil is worth much more.
Not only that, but just maybe opec knows they must keep demand from increasing too fast because they don't have the supply!
http://oil-gasoline.typepad.com/
"Possibly, an even more important difference between 1997 and 2007 is the activity of traders in the over the counter and futures markets. In 1997, trading was slim and investors were easily frightened. Since 2000, a different kind of trader has been in the market. These investors initiate what appears to be rapid trading at the release of news stories, especially those that would normally drive prices down. They essentially sustain and/or push up the price of crude oil in the face of bearish news stories. This activity has been consistent and is largely underwriting the high price of oil.
As a result, the amount of oil sold forward in the futures markets (open interest) far exceeds the real supply and even farther exceeds the real demand by refineries. So, if these particular investors were to decide to take their profits and go home, the entire market could easily collapse - with a huge amount of contracts for sale and no buyers. After all, refiners are mostly purchasing crude oil on long term contracts with producers. It would be foolish to count on their minor demand to support the futures market. And, of course, if you are a buyer without a refinery or huge storage tanks at a dock, then you won't be taking delivery on your orders."
Russia's production is decreasing.
"A producer cannot produce oil unless there is an immediate demand. Since the world's Strategic Reserves are nearing capacity, and few refiners are willing to try to operate with tanks full of $120/bbl oil, production around the world must necessarily be reduced to match demand. And at $120/bbl, demand is diminishing, not increasing. Thus, production must decrease -- and it is. The result? more oil in the ground for future production -- i.e. excess supply."
The current scenario in commodities has taken place thousands of times in the past, and has been properly resolved thousands of times by the Invisible Hand, which has been repeatedly proven as the best possible price determination method in existence. (Is there really a need for me to explain what 'Invisible Hand' means, to a board full of supposed traders?)
So what you're saying, is in essence: "This time it's different!"
But really, it isn't.