OT: speculation and oil prices

As the investigations grind on and on and on, the facts are begriming to float to the surface like so many dead fish. It now
appears (with every possible spin) that 49% of the traders/trades in crude oil over the last few months indeed were speculators or in the terminology of the report "non-commercial market participants."
========<snip> As a result, the number of futures and options contracts held by traders counted as speculators -- those who don't have a commercial need to mitigate the risks of energy prices in their business -- rose to 49% of all crude-oil bets outstanding on the New York Mercantile Exchange, up from 38%. <snip> Meanwhile, a debate is erupting within the agency, which is charged with overseeing the $4.78 trillion commodity futures and options markets, about what the agency does and does not know about participants in this market. The CFTC has been accused by some in Congress this year of lax oversight. <snip> [For a point of reference, the US GDP is currently estimated at around 14.2 trillion in CY dollars. see http://www.bea.gov/national/index.htm#gdp ========From that left-wing rag "The Wall Street Journal" at http://online.wsj.com/article/SB121875013286742245.html?mod=hps_us_whats_news
This appears to be true in every commodity that has had serious run-ups (including metals), with cotton being (one of)the latest. http://online.wsj.com/article/SB121857778719434667.html "CFTC data show an eightfold jump in net buying from Feb. 19 to Feb. 26 by classes of investors that include pension funds and hedge funds. They also made many bets that would work only if cotton prices climbed sharply, according to options brokers and data from the operator of the cotton exchange, IntercontinentalExchange Inc., or ICE." <snip> "He frantically called his contacts in the markets. "I couldn't find anything, no news at all, to change the fundamentals of the cotton business," he says. Yet by day's end, prices on the usually staid market had leapt 15%, and the next day 16% more, before falling back. Investors faced two bleak choices: Come up with far more cash to keep the losing bets on, hoping for a turnaround, or unwind them for steep losses." <snip> "Fallout has been significant for farmers, traders and textile mills. Many cotton shippers are no longer bidding for crops months before harvest and thus are rendering futures markets less effective as risk-management tools, Undersecretary of Agriculture Mark Keenum told the CFTC in April. That situation continues.
And the prices of cotton? After touching $1.09 a pound in the tumult of early March, it closed Tuesday at about 67 cents." ========== Unka' George [George McDuffee] ------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
F. George McDuffee wrote:

Told ya'.
--

John R. Carroll
www.machiningsolution.com
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Thu, 21 Aug 2008 10:32:18 -0700, "John R. Carroll"

<snip> ===========Thanks for the insight and good information.
Somehow the fact that the price spike was due to market manipulation and profiteering will make it more acceptable to public that if the government had imposed some sort of emergency fuel tax to help reduce the current accounts trade deficit.
Any idea how many people got caught short when the oil bubble popped? I have the feeling that the tax payers are about to take it in the shorts again when the cry goes out to stabilize the market by subsidizing the speculators' losses [pension and major financial institutions as creditors/lenders if not direct players] . Highly ironic when you consider that these financial masters of the universe were the ones that caused the problem in the first place, while raping the consumers world wide.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Polytechforum.com is a website by engineers for engineers. It is not affiliated with any of manufacturers or vendors discussed here. All logos and trade names are the property of their respective owners.