Posted: Fri May 09, 2008 12:05 am Post subject: Re: Americans to be banned from overseas oil trading
JohnDenver wrote:
Complete crock of crap. You don't understand how the world oil market functions.
Say, John....
I came across one of your old threads....from September 10, 2004. Here's a quote. YOU wrote it.
Quote:
Thinking about this logically, it is evident that the price of crude oil cannot keep rising forever. At some point, the price of crude oil will reach a maximum, which will never again be exceeded. So here's my question:
In constant 2004 dollars, what is the highest price that will ever be paid for a barrel of crude oil, and in what year will that transaction take place?
FWIW, here's my guess: The peak price will be reached shortly after the production peak in 2010, and will be $90.
Joined: Dec 07, 2005 Posts: 1881 Location: Australia
Posted: Fri May 09, 2008 12:08 am Post subject: Re: Americans to be banned from overseas oil trading
Quote:
So you think a govt who will check the heels of my shoes at the airport, can pick through the minutia about my tax situation, can surveil me picking my nose from a satellite several miles up in the sky, should they choose, can't develop IT systems and reregulate to prevent a leviathon like Sachs from breaking the law, by trying to do an end run around it?
Maybe I wasn't clear enough.
The US government can stop American citizens and corporations from trading. But if a company has been inporporated overseas, then it is not an American company. Therefore the rules wouldn't apply to these. i.e. they would not be breaking the law. _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
Posted: Fri May 09, 2008 12:09 am Post subject: Re: Americans to be banned from overseas oil trading
JohnDenver wrote:
That doesn't affect my point in the slightest, however. The current total open interest on NYMEX light crude is about 1.4 million contracts. Since the margin requirement for one contract is about $7000, all of the light crude contracts on the NYMEX can be controlled for about $9 billion. For hedge funds, that is pocket change.
That's why it's very easy for hedge funds and other speculators to jack up the price of oil and other commodities.
By this logic, any entity, government or corporate, could control the price of oil with a few billion dollars.
So - why doesn't the airline industry do so?
Why doesn't the U.S. government do so?
Why doesn't China or India do so?
Perhaps because such attempts at manipulation would have no effect?
Posted: Fri May 09, 2008 12:21 am Post subject: Re: Americans to be banned from overseas oil trading
threadbear wrote:
You will be wearing mismatched socks, a tinfoil hat and trying to bend spoons with your mind, shortly.
I blame it all on watching too many of Dukey's youtube videos. _________________ "So while you sit and whistle Dixie with your money and your power.
I can hear the flowers a-growin in the rubble of the towers.
I hear leaders quit their lying
I hear babies quit their crying.
I hear soldiers quit their dying, one and all." - OCMS
Joined: Apr 09, 2007 Posts: 5942 Location: Alaska (its much bigger than Texas).
Posted: Fri May 09, 2008 12:43 am Post subject: Re: Americans to be banned from overseas oil trading
threadbear wrote:
The only thing that has been missing when it comes to reigning in corporate excess and speculation, is political will.
Oh, the dems have plenty of "political will" for things like taxing the oil majors and denying the law of supply and demand plays a role in the high oil prices and for blaming speculators and for voting to ban Americans from trading oil in overseas bourses.
The dems also have the political will to spend billions on subsidizing corn ethanol but their bountiful political will and zeal hasn't stopped that policy from becoming a disaster.
The problem isn't a lack of political will. The problem is a lack of brains.
Obama and CLinton and the dems are just wrong when they claim that Oil prices are high because of "speculators"...Back in the real world the law of supply and demand continues to operate. Oil prices are high because global oil production maxed out in 2005 while global demand has continued to grow.
Posted: Fri May 09, 2008 2:04 am Post subject: Re: Americans to be banned from overseas oil trading
Jack wrote:
JohnDenver wrote:
That doesn't affect my point in the slightest, however. The current total open interest on NYMEX light crude is about 1.4 million contracts. Since the margin requirement for one contract is about $7000, all of the light crude contracts on the NYMEX can be controlled for about $9 billion. For hedge funds, that is pocket change.
That's why it's very easy for hedge funds and other speculators to jack up the price of oil and other commodities.
By this logic, any entity, government or corporate, could control the price of oil with a few billion dollars.
So - why doesn't the airline industry do so?
Why doesn't the U.S. government do so?
Why doesn't China or India do so?
Perhaps because such attempts at manipulation would have no effect?
No, because such attempts at manipulation are illegal, and policed on the NYMEX by the CFTC.
The spike in silver around 1980 (courtesy of the Hunt brothers) gives you a good indication of what happens when that policing breaks down, and speculators run amok in a futures market.
Manipulation is very easy if the cops aren't paying attention. _________________ A periscope up every ass!
Joined: Dec 07, 2005 Posts: 1881 Location: Australia
Posted: Fri May 09, 2008 2:11 am Post subject: Re: Americans to be banned from overseas oil trading
Quote:
No, because such attempts at manipulation are illegal, and policed on the NYMEX by the CFTC.
Except in the cases when the commodity exchanges dont care (or been told not care) like in metals short positions.
....Dang, why isn't that graph working? Must be protected from hotlinking. Here is a link instead.
Graph link
Ted Butler 5th of May:
Quote:
In fact, the 8 largest traders in COMEX silver set a new sick record of concentration of 83% once the spreads are removed, up from 82% last week. In other words, the near-record reported net short percentage of 56.6% is understated by almost half again. Forget that no other market has, or has had, such a extreme concentration (save gold), no other market even comes close.
Ted Butler _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
Joined: Aug 14, 2004 Posts: 2066 Location: San Diego, Ca.
Posted: Fri May 09, 2008 3:38 am Post subject: Re: Americans to be banned from overseas oil trading
Prices need to go high enough to destroy demand. Otherwise the world would experience significant oil shortages when we slide down the slope of oil depletion.
Artificially lower oil prices = less incentive to find and produce oil = steeper oil production curve post peak. _________________ "Peak oil isn't more than an interesting industry factoid and doesn't have anything to do with the hysterics speculated on ad nauseum around here!" ReserveGrowthRulz
Posted: Fri May 09, 2008 4:45 am Post subject: Re: Americans to be banned from overseas oil trading
JohnDenver wrote:
...
Complete crock of crap. You don't understand how the world oil market functions. The price of oil in contracts throughout the world is set by adding a premium or discount to the price of crude on the NYMEX. The function of the futures markets is "price discovery". As of today, open interest on the NYMEX for light sweet crude is 300,000 contracts. Each contract is for 1000 barrels, and thus is worth about $124,000. Current margin requirements are about $7000 per contract, so the amount of money controlling the NYMEX light crude market is about $2.1 billion. That's a spit in the bucket for hedge funds, and shows why oil prices are so easily manipulated/buffeted by large speculators.
...
*gales of laughter*
This is comedy gold. The amount of silliness on this forum knows no limits.
Posted: Fri May 09, 2008 4:59 am Post subject: Re: Americans to be banned from overseas oil trading
JohnDenver wrote:
No, because such attempts at manipulation are illegal, and policed on the NYMEX by the CFTC.
Let's see now. You were arguing that speculation and manipulation by hedge funds was driving the price of oil up. And now you're arguing that manipulation by others to drive oil down cannot happen because of legal mechanisms.
Joined: Aug 14, 2004 Posts: 2066 Location: San Diego, Ca.
Posted: Fri May 09, 2008 5:22 am Post subject: Re: Americans to be banned from overseas oil trading
JohnDenver will never get his Space Mirror Economy unless the Gubermint channels oil money into space elevators and robot moon miners. _________________ "Peak oil isn't more than an interesting industry factoid and doesn't have anything to do with the hysterics speculated on ad nauseum around here!" ReserveGrowthRulz
Joined: Apr 06, 2006 Posts: 3423 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Fri May 09, 2008 5:34 am Post subject: Re: Americans to be banned from overseas oil trading
Micki wrote:
....Dang, why isn't that graph working? Must be protected from hotlinking.
Here ye be:
Just save to your computer, then host at Imageshack or the like.
Bradley Edwards says a space elevator can be had for the low low price of $15 billion. Sign me up/Fly Me to the Moon! _________________ Cogito, ergo non satis bibivi
Could you slide your shorts down please?
Posted: Fri May 09, 2008 6:16 am Post subject: Re: Americans to be banned from overseas oil trading
cube wrote:
JohnDenver wrote:
...
Complete crock of crap. You don't understand how the world oil market functions. The price of oil in contracts throughout the world is set by adding a premium or discount to the price of crude on the NYMEX. The function of the futures markets is "price discovery". As of today, open interest on the NYMEX for light sweet crude is 300,000 contracts. Each contract is for 1000 barrels, and thus is worth about $124,000. Current margin requirements are about $7000 per contract, so the amount of money controlling the NYMEX light crude market is about $2.1 billion. That's a spit in the bucket for hedge funds, and shows why oil prices are so easily manipulated/buffeted by large speculators.
...
*gales of laughter*
This is comedy gold. The amount of silliness on this forum knows no limits.
Yes, I made a mistake looking up the total open interest, as Vaseline2008 kindly pointed out. The correct figure is roughly 1.4 million contracts.
With that correction, it turns out that the amount of money controlling the entire NYMEX light crude market is about $9 billion. Which shows that it doesn't take a large amount of money to move the price up or down.
Aside from the careless error, my argument is completely solid because I copied it, almost word for word, from Matt Simmons:
Quote:
The average total open interest in NYMEX crude is about 400,000 contracts. Each contract represents approximately 1,000 barrels of West Texas Intermediate crude oil. Thus, with $17 per barrel as a representative price, the NYMEX market represents $6.8 billion nominal value of crude oil.
However, since commodity contracts are purchased by putting up only $2,025 per contract as margin equity, the $6.8 billion of crude oil is controlled by a total cash investment of only $1.6 billion — $800 million invested long and an offsetting $800 million in short positions.Link(pdf)
I'm pretty sure that the Chairman of the top energy investment bank in the world has a little better grasp of crude futures than you Cube, being as you're just some nickel-and-dime peon daytrader on peakoil.com.
The bottom line is that Jack's position that hedge fund operators can't influence oil prices is a crock of crap, as I said. The NYMEX oil contract is controlled by a very small amount of money, and the NYMEX price governs prices because the NYMEX is used as a benchmark in contracts throughout the world.
Like I said, don't take my word for it. I got this information from Matt Simmons. _________________ A periscope up every ass!
Posted: Fri May 09, 2008 7:06 am Post subject: Re: Americans to be banned from overseas oil trading
JohnDenver wrote:
The bottom line is that Jack's position that hedge fund operators can't influence oil prices is a crock of crap, as I said. The NYMEX oil contract is controlled by a very small amount of money, and the NYMEX price governs prices because the NYMEX is used as a benchmark in contracts throughout the world.
So all those E-V-I-L hedge fund types are going long. They buy a contract. It forces the whole market up.
But when they buy a contract, another party must sell a contract. Thus, for every buyer of a contract, there is a seller.
It balances.
But somehow, someway, the buyers are making the whole oil market go up. But an equal number of sellers aren't making the market go down.
Oh, and John - the futures market is a zero-sum game. For every dollar made on one contract, someone else loses a dollar. So when the E-V-I-L hedge fund operators make a dollar, someone on the other side of the trade loses that same dollar.
Ahh, but who might be on the other side? Speculators, perhaps. But this simply plays one speculator against another. Or maybe those who seek to hedge their usage. But an airline (a user) or a refiner (a user) who wanted to hedge would go long. However, a producer might go short if they thought the price was favorable.
But...that means....the long positions would be in no better position to manipulate the markets than would the short positions.
Alas, that isn't anywhere near as much fun as hitching up one's trousers, turning one's ballcap backwards, and saying "crap" (so everyone recognizes our literary capacity), while blaming everything on faceless, nameless speculators.
Bonus question: If oil is "too high", why doesn't a producer sell contracts on the exchange and lock in a favorable price? Could it possibly be they are well aware that prices are going up even more?
Gratuitous (and completely unnecessary) addendum: I am going to enjoy the die-off. I have a very special salute for the cornucopians.
Posted: Fri May 09, 2008 7:09 am Post subject: Re: Americans to be banned from overseas oil trading
to: JohnDenver
That's not what I meant. Speculators do NOT control the oil market. It's a zero-sum game.
Everytime a speculator makes a buck some other speculator must lose the same amount.
Regardless of whether oil goes up or down in price
profits - loss == zero always
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