The Truth About Commodities, including Oil - Complete Speculation

Quote from limitdown:

post the charts, which are not so readily available on:
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If you want to make a point, I advise YOU post those charts. The point of my chart was that there is a 40 years thumb of rule between the discovery and the peaking of an oilfield. So if overall discoveries peaked 40+ years ago, why is it so surprising that oil production is peaking now?

Sure, there is a speculation premium in the price of oil, but it isreally hard to determine how much it is, and even harder to figure out when it ends.

Until that the bottomline stays: The world started to realize that they are bidding on a very much needed, but limited resource without practical substitutes.... So general, long term price increase shouldn't be a surprise to ANYONE.
 
Quote from drtomaso:


I continue to maintain that if there is anything going on in the oil markets, its going on on the supply side (ie: certain nations pumping under capacity to drive the price up). Note this has nothing to do with speculation.
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Those same nations then send their oil ministers on whatever TV news program is convenient to claim that there is no fundamental support for the current price, and it all must be market manipulation from NY and London.
 
When I began my 50 + years on the street it was as a series #3, although no formal test was required. It was apparent to me the regulators were low wage govt. hacks that were angling for future positions with the very people they were commissioned to be"regulating".Commodities has a long and nasty history.
Now, where do the options /futures come from?Hedgers...who are given by the CFTC rights of lower margin requirements because they will take actual delivery of the physicals as they are truly needed for their business. The hedge is supposed to minimise the risk to the Hedger and pass it on to the Speculator who is trying to make a profit . I doing so it will minimise price variations. IT IS NOT INTENDED TO BE A PROFIT CENTER. Profits made or lost are incidental to the hedge process. Hence the reduced margin requirements for legitimate Hedgers.
I would urge all citizens to DEMAND an open ledger to view the actions of ALL HEDGERS.Do you think the BIG OIL people are paying current pricing? OR would you believe they negotiate a 1-2 year price, with some variations as to supply and /or price.Do they sell both sides of the market by writing options/selling futures , running prices in the pits up and down..re-buying the once sold overly rich options at bargain prices as the market pricing moves away from those recently sold options/futures??????I wonder.DO THE "PIMPS" ON T.V. EVER VENTURE INTO REAL EXPLANATIONS or is advertising revenue the GOD they worship.
 
If all these giant indexers are buying record millions of barrels of oil in the futures market (over the far months), they are also selling record millions of barrels of oil in the near months as they expire.

Buying millions, selling millions, buying millions, selling millions.

Are they pushing up the price or are they pushing it down?

There are only two things we can say conclusively :

1) Indexers are changing the shape of the oil curve by pushing up far month prices and pushing down near month prices.

2) Politicians don't know nothing about the market.

Oil is ultimately a consumed product, not like stocks, so the underlying demand and supply is what matters, simple as that.

Hoarding, whether by an Evil Cartel that withholds production, or by a Stupid Government that hides it under salt domes, is what exacerbates the upward pricing pressure.
 
There are numerous factors in Oil pricing. Control of any major factor is a detriment to fair and honest pricing. I was in Romania for 4 years . They use propane and petrol. We have vast supplies of NG(natural gas )which can be either liquefied or used as is under pressure. Advantages: , 100+ year supply in USA,octane is 104, VERY clean burning, lower auto maintenance costs,almost no pollution, no need for expensive rare element catalysts,price per BTU compared to use of Petrol at today's price ratio 1$ per gallon equiv.,non -volatile (lighter than air )if a leak in tank it moves upward not pooling on ground as a liquid.Disadvantages: no infrastructure to distribute, steel tank capacity for avg. vehicle is 185 miles per tankful.Why is no one seeking /legislating this alternative??????
 
Quote from polpolik:

This is all I hear about why commodity prices are on a parabolic move. Right, cause we're using twice as much oil as we did just a year ago?

No one is arguing oil shouldn't be higher than in previous years, but to be up 100% in a year or so? To be up about 50% since February? If that isn't speculation, I don't know what is.

Same argument in the 70s. This is a bubble inflated with easy money injected into the system across the globe, plain and simple.
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All this blame the speculators stuff is the easy idea to come to. If you need proof that its the easiest idea to come up with, just look at how many in Congress are touting it about and how many people just jump right on it. We should all be careful though as the rush to regulation is not usually a wise move, especially when those who know nothing about markets and the function they have go on to create the new regulations. Witness price controls under Carter or more recently Sarbanes-Oxley in the equities market. Taking the easy answer seldom fixxes the real problem, and most often creates a whole slew of new ones as well. This idea that "speculators" are driving the market is particularly dangerous as it mixxes half truths with a lot of myth. As occurs in many other areas (illegal immigration for example) enforcement of the current regulations (for example position size limits for non commerical players in the market) rather than new ones would likely have a better effect.
 
Quote from drtomaso:

While you are at it, please post charts showing where speculators are stock piling all the oil that they refuse to sell to consumers at lower prices, and thus must take delivery of.

Or maybe its that there isnt enough to meet demand, so they have no trouble finding buyers even at $130+.

I continue to maintain that if there is anything going on in the oil markets, its going on on the supply side (ie: certain nations pumping under capacity to drive the price up). Note this has nothing to do with speculation.
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I don't recall being the proponent of "speculators" as its being talked about in the media, and would certainly like to see such a chart too...

perhaps ask someone else...
 
Mkt speculation and mkt manipulation are seperate matters. ICE and other UNREGULATED so called exchanges are where the manipulators operate with no position limits etc.

Real hedgers and specs operate in REGULATED EXCHANGES. Gee, the REGULAR exchanges worked for hundreds of years and back in the day of mkt corners those "SPECS were usually blown up by their own manipulations. Last example was the Hunt brothers. How many billion did they blow out their ass?

The myth of there is a buyer for every seller is silly because being a local scalping cars all day and being a mkt manipulator that HOLDS cars in a HUGE position is a whole different seller or buyer than a scalper making a market.

UNREGULATED mkt crooks are fucking up the whole deal. TIME to clean up the UNREGULATED BOOKIE JOINTS> ..
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this topic has been beaten to death. the people who believe speculation is driving the price are like religious fundamentalists, no amount of evidence will change their mind. they have a dog on this fight, perhaps they are too angry at seeing their prices go up everywhere, or they are angry seeing people make fortunes while they are stuck in drawdown and have to watch CL go up without him or perhaps they belong to the church of contrarianism that says anything people are bullish on with big price targets needs to crash tomorrow
 
Agree, they come up with all these conspiracies. Ignoring the most simple and immediate truth. There is not enough oil on the market, creating a bidding war for futures contracts. Sure some of this is speculation due to doubts about the immediate and long term future of oil, but so what, these are valid fundamental reasons to be buying more right now.

Price will keep going up until demand decreases, the world simply has huge doubts about being able to supply the current demand and next years demand.

People claiming supply and demand curves are a linear relationship are fools.
 
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