Posted on 07/13/2009 1:31:38 PM PDT by FromLori
Big speculators such as hedge funds and investment banks have sharply reduced their buying positions in oil futures in recent weeks, just as regulators are considering setting limits in energy speculation.
The drop in speculative positions likely contributed to last week's 10% slump in oil prices -- the biggest weekly loss in six months, analysts said.
Long, or buying, positions held by non-commercial traders, a category the regulator uses to classify big speculators, dropped by 16,382 contracts in the week ended July 7, according to the weekly Commitments of Traders report released by the Commodity Futures Trading Commission late Friday. One contract represents 1,000 barrels of oil.
That's the biggest drop in four months in oil futures traded on the New York Mercantile Exchange, according to COT historical data. Long positions held by speculators now stand at the lowest level since the week ended May 26.
Meanwhile, speculators increased their selling, or short, positions, resulting in a 60% slump in net long positions. Net long positions held by speculators now stand at 15,357 contracts, the lowest since May 12. See the latest COT report.
The change in speculative positions came as the CFTC announced on July 7, that it's considering setting limits in the number of positions speculators can take in the energy futures market. See full story.
The CFTC will hold a series of hearings starting from later this month, said David Gary, a spokesman for the Washington-based agency.
Oil prices tumbled nearly 6% in the two sessions ended July 7 on the Nymex. Over all, futures lost 10.3% last week -- the biggest weekly loss since the week ended Jan. 9.
In Monday's trading, oil prices continued to slide, falling to the lowest level in two months as demand concerns weighed on prices.
(Excerpt) Read more at marketwatch.com ...
Futures contracts have margin requirements.
As a matter of fact if you and I work together to move the price up or down, but we never have to take delivery of the oil or gasoline, we are in business can work together cause prices to rise (change) and never be a part of the market.
Why don't you explain how you and I could do that?
Commodity market was originally designed for users to guestimate future prices, lock them in by buying them to support their business needs. It allows the miners/producers to get cash up front from the users to continue operations so the product will be available down the line. It does serve a legitimate purpose. Now if we add someone who borrows money to buy the commodity futures and uses a computer program to drive buy and sell in minutes. All these investors do not even touch the product but use the system to make a quick buck. They create a feeding frenzy and drives the prices drastically up or down, and the main users of the commodity are caught in the the maelstorm. Imagine running a trucking line for grocery stores and your gas bill can swing 50 percent every quarter. Imagine what it does to the prices of groceries and what it does to the consumer.
OPEC will really have the upper hand as it will have a bigger impact in manipulating prices. These severe fluctuations will then usher in Cap and Trade where we will will see those gas shortages. OPEC will then have even more leverage as countries beg them to increase output.
And this is what Obama wants.
I think it means Obama’s going to drive oil prices into the stratosphere with the help of OPEC or any given disaster. He will use a gasoline price crisis to institute Cap and Trade. What will result are shortages that will give OPEC the upper hand against the United States.
Here’s the deal, like it or not both parties are corrupt... the corruption comes from different sources and philosophies, but both are corrupt.
Republicans anymore swing way way way way too far into the “market are gods” territory... Too many take too much money from big businesses and industries (banking basically owns both parties folks) they won’t bite the hands that feed it, and have fooled enough of the rank and file into this line of thinking by a century plus of propoganda.
Democrats have the same problem, except their philosophies are more along the line of “government is god”. They are beholded to their donors, and the overlap particularly among the investment classes is HUGE.
It behooves them to sit back and do nothing when things go insane, because they get bribed to sit back and do nothing.
Markets are not gods, governments are not gods, anyone who advocates either position is an abject fool.
Capitalism unfettered breeds just as much oppression and corruption as any other ism can. The individual becomes subjugated to someones perceived value of them in a capitalist system that is completely unfettered. So, for example if I know, you will die from doing the job I need you to do, and your death might warrant me paying out $1M to your family, but in the course of your life working for me in that job you earn me $20M net profit... Making you do something that will kill you is absolutely justifiable. Your cost is below my profit and so having you do it makes sense. The only difference between unfettered capitalism and unfettered communism or socialism is that the people who do the opressing are distributed by wealth, not by birthright or government position. The end game for the individual is exactly the same.
Now, fortunately we don’t live in an unfettered capatilist society, we do have a system of laws and government that oversees the capitalist system and keeps it ideally within a moral framework.
There is a role for government, and our government has been so corrupted, and our political system so screwed up, that its effectively a failure. We have a system of government that literally rewards doing nothing, saying nothing and achieving nothing. It effectively punishes leadership and rewards complacency.
“Unfettered capitalism breeds corruption” - Theodore Roosevelt. (He was a republican by the way.)
You are right republicans should have been all over this issue... Bush should have said “wall street got drunk” in front of America, not in some back room meeting... because its the TRUTH. Instead of the truth we get hack kneed idiots regurgitating nonsense that the CRA caused the housing bubble. Absolutely utter nonsense, but since the R’s have engaged in this “the market is god” nonsense so long, they can’t possibly admit GREED, unadulterated GREED is what caused the mess.
GREED, unadulterated GREED created the commodies bubble... the regulators should have shut down the blatant manipulation in oil years ago, but they didn’t. Its all such a joke, there are no leaders in washington regardless of the letter beside their names.
Well it is not often that someone posts a well thought out AND factual comment such as yours - I thank you. I agree and I think that things like the Tea Parties and people like Sarah Palin may wake up a few people. That is to say that working class, state college educated people have some damn good ideas and they are on to them long before the cocktail party republicans. You sir have hit the nail on the head.
You sir are a well educated man.
1. Who said anything about farming? Your comment and my response were confined to the role of speculators in the commodity markets.
2. But, now that you mention it, farmers are active participants in the commodity markets -- buying, selling, hedging. Never heard of selling your August soybeans, e.g., in the previous November? Is that not "speculation"?
3. And, yes, I was a farmer once. 29,000 pecan trees. But, alas, there was no futures market for pecans...
Farmers and ranchers do not use the futures market for Sh__ . They produce , they sell, and for the most part they sell to the same buyer they have sold to for years. They are real life business people. They for the, most part, in today's world, are well off individuals. A grain farmers equipment costs one hell of a lot of money.
And a pecan farmers, real life experience in farming is what!!! ROFLOL!!!
Farmers and ranchers do not use the futures market for Sh__ . They produce , they sell, and for the most part they sell to the same buyer they have sold to for years. They are real life business people. They for the, most part, in today's world, are well off individuals. A grain farmers equipment costs one hell of a lot of money.
And a pecan farmers, real life experience in farming is what!!! ROFLOL!!!
That's not my statement. Fool.
Nonetheless, it's true. Farmers and ranchers DO use the futures market to hedge against price fluctuations. I knew about a dozen of them who did, myself -- my neighbors.
What's your farming experience? Weed?
I still care. See my tagline.
The little woman has a fine herd of Angus cattle. WEED.
And the part about gambling on the futures, talk is cheap!!
I don't deny your particular experience. Some operators don't work the markets and sell their crop to the co-op for whatever the market price is.
However, intellectual honesty should lead you to admit that many farmers -- soybeans, cotton, wheat, corn -- use the markets to hedge their investment. Farmers of the same size and scale as your 1500 A. Like my family and friends, back in Oklahoma.
Strictly speaking, they're not gambling -- they are hedging, locking in a future price they can live with and avoiding any downside.
Perhaps your family didn't do it. But many family farmers do, as well as the large corporate farms. It's not uncommon, it's certainly far from rare, perhaps even the majority among serious operators.
To argue otherwise is to be mistaken.
But the low breeds at the market always try to hide behind the farmers.
Aside from your own personal experience, do you have any other reason for making that assertion?
Because it’s fact!!!
No proof. That’s what I figured...
Have all the proof I need, speculators are lower than whale manure and that’s at the bottom of the ocean.
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