Wall Street is driving up oil prices (Evil Wall Street and Oil Companies at it again. /sarc)

MSNBC ^ | 3/30/2010 | John W. Schoen

[tobyhill]

Oil prices have steadily rose over the last year, and experts are worrying further increases could snuff out an already-fragile global economic recovery.

President Barack Obama is expected to announce Wednesday his plan to open oil and natural gas drilling off the Atlantic Coast and Gulf of Mexico. The proposal aims to reduce the nation’s reliance on foreign oil, which theoretically could hold down prices for U.S. consumers.

OPEC countries also are convening in Mexico this week to map out a strategy for keeping prices from rising higher.

But officials may face an even bigger problem: The recent rise in prices seems to be driven by Wall Street investors — not market supply and demand.

Though prices crashed from their peak of $140 a barrel before the recession began in December 2007, they have since recovered substantially. Last year, the price of crude fell to $33 a barrel before a relentless recovery to about $80 by year-end.

[Toddsterpatriot]

They are using 0 % intrest money to play the market.

How much 0% money are they using every day to play the markets?

They can drive the futures of oil, which is no gamble

LOL!

It is not supply and demand

What's not supply and demand?

[Toddsterpatriot]

So Semgroup bet correctly, but too soon?

Yes. Assuming they were really selling oil at $100.

So it was buried by margin calls?

Yes. Forced to liquidate before oil dropped.

So does that mean that others conspired to put Semgroup out of business?

No.

Does that mean that Semgroup was squashed for predicting what happened?

No.

[Toddsterpatriot]

Your initial doubt of whether it was manipulation or not is now apparently resolved to the consensus and the historical record.

Really? I was on vacation. What was the resolution?

[Toddsterpatriot]

The British bank may have profited from the company's bankruptcy.

Barclays PLC, the third-largest bank in Great Britain, may have profited from the bankruptcy of Tulsa-based SemGroup LP, according to SemGroup creditors.

On July 16, Barclays bought the energy trading account of SemGroup, which took a $2.4 billion loss on the transaction and filed for bankruptcy a week later. The energy transportation company said in court documents that its trading strategy went awry as rising oil prices forced it to pay higher margin deposits at the New York Mercantile Exchange. The losses probably turned into gains as Barclays closed out SemGroup's bets, creditors said.

The transfer of SemGroup's account "likely resulted, on the opposite side of the transaction, in significant gains for Barclays," said the energy transporter's unsecured creditors, which include BP Amoco PLC and Pacific Investment Management Co., in court documents.

May have? Likely? My God, you've discovered the smoking gun. LOL!

[q_an_a]

Well I suggested an article by Ed. Wallace in BusinessWeek, he ahs better details, but the number is billions in loans over night loans. According to Bloomberg they used 30 billion in 28 days in January.

The price of oil and gasoline is not now based upon supply and demand it is driven by speculation. For the past 2 years our oil imports and gasoline usage has dropped by 20% but today the price of gasoline is $1.00 higher than a year ago.

[Toddsterpatriot]

Well I suggested an article by Ed. Wallace in BusinessWeek

I didn't see anything recent. You have a link?

but the number is billions in loans over night loans

Less than $11 billion. Hardly big bucks.

And your claim, "They can drive the futures of oil, which is no gamble to new highs, sell and with no risk they pay back their laons to the Fed"

Is just silly.

The price of oil and gasoline is not now based upon supply and demand it is driven by speculation.

When Southwest Airlines buys oil futures, is that demand or speculation?

When I buy an oil contract, why isn't that demand?

For the past 2 years our oil imports and gasoline usage has dropped by 20% but today the price of gasoline is $1.00 higher than a year ago.

And it's $1.00 lower than it was 18 months ago.

[dragnet2]

(Evil Wall Street and Oil Companies at it again. /sarc)

Are you suggesting the corrupt insiders on Wall Street and their good buddies in D.C. were not complicit and were not a major contributor to this economic disaster?

[q_an_a]

Thanks for your comments - good bye

[Toddsterpatriot]

Don’t let the facts ruin your rants.

[q_an_a]

Here try this link http://www.cnbc.com//id/36126299 to see that funds are running oil prices. Southwest is a user of oil and Bank of America is not - that is the point. You should get our more often.

[Toddsterpatriot]

Southwest is a user of oil

You are incorrect. Southwest does not use crude oil.

Did you read about SemGroup? Do you still think it's a risk free trade when funds buy oil futures?

[expat_panama]

"...price of oil and gasoline is not now based upon supply and demand it is driven by speculation..."

That's what the article said and lots of people feel that way --that the futures speculators are wrong about where prices are going.  If you know you're right then you can step up and restore sanity, and get rich doing it. 

You can correct prices that you consider foolish by making your own market offers.  I did it a few years ago --I bought oil companies and refineries during a price jump and as it peaked I made a bundle.   I'm not in right now though, imho these days it's the futures traders who're right and it's the pundits who're full of it, but hey go for it and let us know how it works out.

[expat_panama]

it's $1.00 lower than it was 18 months ago.

 

That's true, prices and imports went up, then they went down.  Not that it matters though...

[SAJ]

If I had to wager (fortunately, I **don't** have to...), it would be that crude would be higher in 6 months' time. The funds or big specs or whatever you want to call them invariably overdo things to the upside.

Thanks again for your time yesterday, Pete!