I agree.
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Posted on 04/27/2012 4:55:28 AM PDT by SeekAndFind
So... What happens if all of the speculators decide to move their business off shore?
Your understanding of the futures market seems very thin. Futures trades actually smooth out the irregularities that would develop in any commodity due to seasonal, political, weather, transportation anomalies etc. When you take on a futures contract you own the product. You may make a profit or you could take a big big loss depending on the fluctuations. Since most commodity contracts are held for minutes, maybe a couple of hours, they are traded actively and the prices stay in a very close range. Go spend a day at the Chicago Board of Trade or the Merc or any of the active commodities exchanges and learn how the system works. You'll be glad you did.
Former trader
Perhaps you should talk to Eric Bollings about it.
If you know more about it than he does you could get your own TV show.
I agree.
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There is no way to compare oil to NG.
NG has sales value limited by pipelines or underground storage space, which is limited.
Oil can be transported by truck from the wellheads, to tanker ships and sold anywhere in the world.
The difference between the two equates to supply and demand. You cannot successfully speculate an increase in price if there is an abundance of supply relative to demand.
Speculation is not the source of high prices. Limited supply relative to demand is the source. Speculation is only one of the pricing steps given the supply and demand conditions.
The only lasting way to lower price is to increase supply relative to demand (or decrease demand relative to supply or both). Far more oil is traded in markets outside the US. To make the NYMEX more restrictive only pushes more traders to operate in foreign markets. To think that we will be priced separate of those is naive, especially considering that most of the crude oil we use is imported.
Also natural gas is shipped by tanker, even LNG is shipped by truck in some locations. It is only a matter of price; the transport costs are greater than compared to oil, but not prohibitive in many markets.
Control a majority of the market? Not unless they take delivery and sit on it, otherwise how would they control any of it?
Wall Street financial companies Goldman Sachs, JP Morgan, Citigroup and others all had sizable oil storage operations in 2008. They didn't even have to move the oil, they just traded futures contracts off it and let 'contango' do the rest.
How sizable?
How does ‘contango’ let them control the market?
It's been estimated that close to 10% of the available oil was being held off the market this way in 2007-2008, certainly enough to drive prices higher and ensure these players won their 'bets'.
Oil futures contracts are for future delivery. This isn’t like they are just gambling on Intrade - they are buying contracts for oil delivery. The fact that they don’t take delivery doesn’t mean they don’t control the market. As much as 80% of the contracts for future oil delivery are held by speculators. Sure, they can default and not take delivery - after all, the margin requirements are so low that they risk little by doing so. However, speculation has an enormous impact - even the CEO of Exxon has said that as much as 40% of the price of oil is due to speculation. That might be current, but if past history is any indication it can be much higher than that.
10% would be about 8 million barrels a day. Nearly 3 billion barrels a year.
Where did you find that estimate?
If you don't touch the oil, don't store the oil, don't consume the oil, how do they control anything?
As much as 80% of the contracts for future oil delivery are held by speculators.
So what?
Sure, they can default and not take delivery -
Default? What does that mean in reference to an oil futures contract?
after all, the margin requirements are so low that they risk little by doing so.
Yeah, they could lose their margin deposit. How little do you think that would be?
even the CEO of Exxon has said that as much as 40% of the price of oil is due to speculation.
And why wouldn't he say that? Anything that gets the idiots attacking Exxon to attack someone else is a good thing. It's easier than actually educating the idiots.
I'd like to see you acknowledge that before delving into the question of 'how big' a bunch of greedy whores they are.
They hold a contract for delivery. If the oil producers don’t have it reserved for them, then it isn’t a contract. This is in no way a difficult concept to understand. They purchase a contract for future delivery with the sole intent of reselling it, though several large banks HAVE taken delivery - this time with the sole intention of stockpiling it to prevent losses.
Didn’t I read that Zer0 started tapping the SOR this week or last?
We can be assured that gas prices will stay below the $4/gal. mark until after the election.
That seems to be the price that perks the naysayers.
When the market thinks something is going to increase future usage or decrease future supply, the futures market turns that into rising prices.
When the market thinks something is going to decrease future usage or increase future supply, the futures market turns that into falling prices.
And it has nothing to do with greedy whores.
Who? The nasty speculators? What about the speculators who are short a contract?
If the oil producers don’t have it reserved for them, then it isn’t a contract.
You don't think all contracts are sold by oil producers, do you?
They purchase a contract for future delivery with the sole intent of reselling it,
When they buy the contract, it makes prices rise? When they resell it, don't prices go down?
Food aid, if their lucky. US communities will cheer the arrival of UN food trucks. /sarc off
The leftist aka progressive blame high gas prices on every thing but them. No new refineries. Epa laws mandating more then 20 different blends of gas for the nation.
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