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Nickelless
Administrator
USA
5580 Posts |
 Posted - 05/30/2008 : 03:22:34
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WASHINGTON - Federal regulators are six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation.
The Commodity Futures Trading Commission today said it started the probe in December and took the unusual step of publicizing it "because of today’s unprecedented market conditions."
Crude prices have risen more than 42 percent since early December, even after a decline of more than $4 to $126.62 a barrel on the New York Mercantile Exchange. Gasoline prices are nearing a national average of $4 a gallon, up from about $3.20 a year ago.
The commission said details of the investigation remain confidential, but announced a handful of other initiatives designed to increase transparency of U.S. and international energy futures markets.
For example, the CFTC said it will immediately require monthly reports from institutional investors who manage funds designed to mimic the price of crude oil and other energy futures. The goal, the agency said, is to identify the amount of such index trading and to "ensure that this type of trading activity is not adversely impacting the price discovery process."
The CFTC also said it has reached an agreement with its British counterpart and InterContinental Exchange Inc.’s Futures Europe to expand surveillance of energy futures contracts with U.S. delivery points, including the benchmark West Texas Intermediate crude, which trades on the Nymex.
"The implementation of today’s measures will improve oversight of the energy futures markets to ensure they reflect fundamental economic forces of supply and demand, free of manipulation and fraud," the CFTC said in a statement.
Analysts said the CFTC action would likely have a limited impact on oil prices, which have risen on a combination of factors, including growing demand in China and other developed nations, the falling value of the dollar, geopolitical tensions and low interest rates, which have fueled a futures buying binge by institutional investors seeking to ride oil’s upward momentum.
It is the last factor, exacerbated by the Federal Reserve’s efforts to prop up the ailing housing market, that is playing the biggest role in the recent runup, according to Howard Simons, a strategist at Bianco Research in Chicago.
"Eliminate that excess money and the problem (of soaring prices) disappears," he said.
Still, the CFTC action "will have a chilling effect" on speculative investors’ enthusiasm for energy futures, Simons predicted. "What they’re saying ... is, ’You either stop this or we’re going to stop it for you.’"
At least one energy analyst sees trouble on the horizon for pension funds and other non-traditional investors looking to commodities indexes as just another type of security they need to have in their portfolios. If a major price drop occurs, this relatively new breed of investors will want out of energy futures at the same time and it will be "like entering a revolving door at the wrong time in the wrong direction," according to Cameron Hanover Inc. President Peter Beutel.
U.S. Sen. Jeff Bingaman, chairman of Senate Energy and Natural Resources Committee, earlier this week asked the CFTC to provide the committee with more information about its oversight of energy commodity markets.
The New Mexico Democrat said he was concerned about increasing trading activity in U.S. crude oil taking place overseas and in over-the-counter markets. He also questioned the CFTC practice of classifying large investment banks as "commercial" market participants alongside traditional buyers and sellers, and its "continued assertion that noncommercial participants, or speculators, follow rather than lead oil price movements."
Bingaman on Thursday said he was pleased with the CFTC steps and that a future hearing will explore how they will address his concerns "that the commission lacks a robust understanding of the oil market."
Congress earlier this month voted to give the CFTC greater oversight of unregulated electronic exchanges, such as ICE, as a way to protect consumers and deter price distortion and manipulation.
A Senate subcommittee investigation last year found that hedge fund Amaranth Advisors LLC, which collapsed in 2006 after losing more than $6 billion in natural-gas trades, had shifted its activities to ICE from the regulated Nymex to avoid trading limits, and that the "excessive speculation" raised homeowners’ heating bills.
Speculation has been cited as one on many factors contributing to surging petroleum prices, along with assumptions about new supplies, limited demand growth, possible supply disruptions overseas and the dollar’s depressed value against other currencies.
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redneck
1000+ Penny Miser Member
1273 Posts |
Posted - 05/30/2008 : 06:50:49
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Excellent article.
This is what I was talking about.
Excessive speculation by manipulation of the markets and unregulated electronic exchanges, such as ICE and OTC, that cause price distortion.
Quote;
Speculation has been cited as one on many factors contributing to surging petroleum prices, along with assumptions about new supplies, limited demand growth, possible supply disruptions overseas and the dollars depressed value against other currencies.
(keywords - Speculation,assumptions,limited demand and possible)
"Eliminate that excess money and the problem (of soaring prices) disappears," he said.
Still, the CFTC action "will have a chilling effect" on speculative investor enthusiasm for energy futures, Simons predicted. "What they are saying ... is, either You either stop this or we are going to stop it for you.
(end)
Lets hope there's more action and less talk, for the sake of all of us.
If you are heavy in oil stocks,now may be the time lighten up a little. |
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redneck
1000+ Penny Miser Member
1273 Posts |
Posted - 06/01/2008 : 19:55:23
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Here's another great article;
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Excerpts;
There are three things that are driving up the price of oil: the falling dollar, speculation and buying on margin.
The dollar is tanking because of the Federal Reserve's low interest monetary policies have kept interest rates below the rate of inflation for most of the last decade. Add that to the $700 billion current account deficit and a National Debt that has increased from $5.8 trillion when Bush first took office to over $9 trillion today and it's a wonder the dollar hasn't gone “Poof” already.
According to a January 4 editorial in the Wall Street Journal: “If the dollar had remained 'as good as gold' since 2001, oil today would be selling at about $30 per barrel, not $99. (today $126 per barrel) The decline of the dollar against gold and oil suggests a US monetary that is supplying too many dollars.” Wall Street Journal 1-4-08
The price of oil has more than quadrupled since 2001, from roughly $30 per barrel to $126, WITHOUT ANY DISRUPTIONS TO SUPPLY. There's no shortage; it's just gibberish.
Could it be? Could the Fed really be looking the other way so it can bail out its banking buddies while they drive prices skyward?
“Today, Index Speculators are pouring billions of dollars into the commodities futures markets, speculating that commodity prices will increase. ...In the popular press the explanation given most often for rising oil prices is the increased demand for oil from China. According to the DOE, annual Chinese demand for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion barrels, an increase of 920 million barrels.8 Over the same five-year period, Index Speculators#700; demand for petroleum futures has increased by 848 million barrels.
THE INCREASE IN DEMAND FROM INDEX SPECULATORS IS ALMOST EQUAL TO THE INCREASE IN DEMAND FROM CHINA.
Index Speculators have now stockpiled, via the futures market, the equivalent of 1.1 billion barrels of petroleum, effectively adding eight times as much oil to their own stockpile as the United States has added to the Strategic Petroleum Reserve over the last five years.
Brimming oil tankers are presently sitting off the coasts of Iran and Louisiana. The Strategic Petroleum Reserve has been filled. Demand is flat. The world's biggest consumer of energy (guess who?) is cutting back . As CNN reports:
“At a time when gas prices are at an all-time high, Americans have curtailed their driving at a historic rate. The Department of Transportation said figures from March show the steepest decrease in driving ever recorded. Compared with March a year earlier, Americans drove an estimated 4.3 percent less -- that's 11 billion fewer miles, the DOT's Federal Highway Administration said Monday, calling it "the sharpest yearly drop for any month in FHWA history." (CNN)
The great oil crunch is another fabricated crisis; another "smoke and mirrors" fiasco; another Enron-type shell-game engineered by banksters and hedge fund managers. Once again, the bloody footprints can be traced right back to the front door of the Federal Reserve. Don't expect help from the regulators either; they've all been replaced with business reps like Harvey Pitt or Hank Paulson.
Could it be, that some people are starting to smell the stink of all of this?
The Feds should be investigating the Fed....
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Edited by - redneck on 06/01/2008 19:59:04 |
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redneck
1000+ Penny Miser Member
1273 Posts |
Posted - 07/30/2009 : 10:02:27
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"Update"
CFTC: Speculators caused 2008 oil price crisis
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Excerpts;
In a major U-turn from its claims during the Bush administration, the Commodity Futures Trading Commission is now set to admit that speculation in oil markets — and not the forces of supply and demand — are behind last year’s massive oil price spike.
At the time, the CFTC — which is tasked with regulating commodity and financial futures — said that the huge price spike was a result of supply and demand. That explanation was met with ridicule from many market-watchers, who said it was impossible that demand for oil increased by such a huge margin even as the North American, European and Japanese economies were slowing down.
quote:
With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market — stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil.
Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008…
But it was all a lie. While the global supply of oil will eventually dry up, the shortterm flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the shortterm supply of oil rising, the demand for it was falling — which, in classic economic terms, should have brought prices at the pump down…
So what caused the huge spike in oil prices? Take a wild guess.
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With Government oversight like this,is it really hard to understand why, we're where we're at right now ?
America,
Land of the free sheep herders,
and the
Home of the brave sheepeople...
>
For those having a hard time putting 2 + 2 together,
this is what caused the "recession - depression" .
>
quote:
Control oil and you will control countries...
Control food and you will control the people...
Henry Kissinger
The second part of that quote is the next shoe to drop...
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Feds investigating possible price-fixing in oil
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