[Cashmere]

LINKY


Well, at least at the bell, traders are unimpressed with KSA's promises, promises.

In other words,

the bluff has been called.

If oil is up more than 10 bucks this week (to 144), all HELL is going to break loose in Congress.

You're going to start seeing the Atlas Shrugged game plan trotted out for enactment.

[copious.abundance]

Sorry, it's only up 25 cents now.

[Micki]

Aug/Sep futures up $1.25.

[threadbear]

LINKY


Well, at least at the bell, traders are unimpressed with KSA's promises, promises.

In other words,

the bluff has been called.

If oil is up more than 10 bucks this week (to 144), all HELL is going to break loose in Congress.

You're going to start seeing the Atlas Shrugged game plan trotted out for enactment.

Why would congress actually do anything about it. The investment banks are making back a lot of money they lost in the sub prime mess, by betting on oil futures. The Saudis are buying up chunks of junk to help keep the banks solvent, with the proceeds from higher prices. So congress is going to make all the right noises, but in the end, any laws or regulations they create will be toothless. Would you rather help bail out the banks through higher taxes, which are non negotiable, or at the pump? You can walk, cycle or motor scooter, but taxes offer you no alternative.

[Cashmere]

Threadbare - IBs are making a killing on oil?

Prove it.

That statement is irresponsible if you don't have proof.

IBs are in trouble. As far as I can tell there are going to be one or more further BSs in the near future.

[Cashmere]

Up a buck 58 in electronic selling.


I think this may be it.

We may be looking at the beginning of a huge run up.

[Cashmere]

1.87 and climbing.

[Serial_Worrier]

Onwards doom marchers to $300bbl and smoldering ruins of the world economy!

[Micki]

Anyway, oil finished up $1.04 today on the NYMEX. Not much excitement.

I find it pretty exciting. SA calls for urgent meeting to curb oil prices and the result is up$1. Shouldn't a meeting like this have lead to $10-20 down. It speaks of impotence.

[TreeFarmer]

Remember the movie Jerry McGwire and the saying "SHOW ME THE MONEY!"? Well the markets seem to be saying "SHOW ME THE OIL!". It appears that only actual production and building inventories are going to cause a market pullback. Promises are being discounted 100%.

TF

[threadbear]

Threadbare - IBs are making a killing on oil?

Prove it.

That statement is irresponsible if you don't have proof.

IBs are in trouble. As far as I can tell there are going to be one or more further BSs in the near future.

I don't think I said they're making a killing, but making back some of their losses. Likely. Does this mean oil depletion ISN'T a problem. NO.

The Great Oil Swindle:

Is it possible that gambling on oil futures might be a temptation for banks that are already underwater from a trillion dollars worth of mortgage-related deals that have “gone south” leaving the banking system essentially bankrupt?

And if the banks and hedgies are not playing this game, then where is the money coming from? I have compiled charts and graphs that show that nearly two-thirds of the big investment banks' revenue came from the securitization of commercial and residential real estate loans. That market is frozen. Besides, this is not just a matter of “loan delinquencies” or MBS that have to be written off. The banks are "revenue starved". How are they filling the coffers? They're either neck-deep in interest rate swaps, derivatives trading, or gaming the futures market. Which is it?

Of course, there is one other possibility, but if that possibility turned out to be right than it would cast doubt on the legitimacy of the entire financial system. In fact, it would prove that the system is being rigged from the top-down by our friends at the Banking Politburo, the Federal Reserve. Here goes:

What if the investment banks are trading their worthless MBS and CDOs at the Fed's auction facilities and using the money ($400 billion) to drive up the price of raw materials like rice, corn, wheat, and oil?

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

http://globalresearch.ca/index.php?context=va&aid=9138

Bear in mind what George Soros said, there is always some fundamental reality behind speculative bubbles--and in this case there are several good reasons for oil and commodities to be going up. Peak oil, climate change crop disasters, etc...But we can't discount the organized opportunism that accompanies these real events. Oil will never settle back down to a comfortable price and I'd be surprised if food did, either.

[DantesPeak]

Threadbare - IBs are making a killing on oil?

Prove it.

That statement is irresponsible if you don't have proof.

IBs are in trouble. As far as I can tell there are going to be one or more further BSs in the near future.

What if the investment banks are trading their worthless MBS and CDOs at the Fed's auction facilities and using the money ($400 billion) to drive up the price of raw materials like rice, corn, wheat, and oil?

Isn't it also possible that the Fed and others are trying to drive down the price of oil?

I keep thinking here - you may just get what you wish for - no futures - but the unwinding of futures may push up the price of oil if the speculators weren't really behind the price rise.

Paulson: No Evidence Speculation Is Driving Oil Prices

DOW JONES NEWSWIRES
June 24, 2008 4:36 p.m.

By Henry J. Pulizzi


CANCUN, Mexico (Dow Jones)--U.S. Treasury Secretary Henry Paulson said he sees no evidence that speculators are the major force behind rising oil prices, a view that puts him at odds with lawmakers who believe new limits on trading could ease energy prices.

"I don't, and I've been unable to find evidence, that financial speculators or investors have driven this," Paulson told a small group of reporters Tuesday. He was speaking between sessions of a meeting of finance ministers from the Americas and the Caribbean.

The Bush administration believes supply and demand issues, rather than speculators in financial markets, are the prime cause of record oil prices. But speculators have become a target on Capitol Hill, where lawmakers are mulling restrictions on swaps and bilateral trading in the energy futures markets.

Paulson conceded that speculation is one of many variables contributing to market moves, but said that by and large it can help provide efficiency in markets. Part of the problem, said Paulson, a former head of Goldman Sachs , is that people often don't understand how financial contracts work. Speculators and hedgers are on both sides of the market, he said.

"I didn't say it wasn't a factor," Paulson said. "I said I don't think it is a major factor and I don't think it is the driver."

Asked if enhanced regulation of energy futures is unnecessary, Paulson said, "I didn't say it was unnecessary."

"I'm not saying there's not room for improvement, we're studying this issue, and we're continuing to study it and looking at it very carefully," he said.

WSJ

[copious.abundance]

Up 26 cents today.

[threadbear]

Threadbare - IBs are making a killing on oil?

Prove it.

That statement is irresponsible if you don't have proof.

IBs are in trouble. As far as I can tell there are going to be one or more further BSs in the near future.

What if the investment banks are trading their worthless MBS and CDOs at the Fed's auction facilities and using the money ($400 billion) to drive up the price of raw materials like rice, corn, wheat, and oil?

Isn't it also possible that the Fed and others are trying to drive down the price of oil?

I keep thinking here - you may just get what you wish for - no futures - but the unwinding of futures may push up the price of oil if the speculators weren't really behind the price rise.

Paulson: No Evidence Speculation Is Driving Oil Prices

DOW JONES NEWSWIRES
June 24, 2008 4:36 p.m.

By Henry J. Pulizzi


CANCUN, Mexico (Dow Jones)--U.S. Treasury Secretary Henry Paulson said he sees no evidence that speculators are the major force behind rising oil prices, a view that puts him at odds with lawmakers who believe new limits on trading could ease energy prices.

"I don't, and I've been unable to find evidence, that financial speculators or investors have driven this," Paulson told a small group of reporters Tuesday. He was speaking between sessions of a meeting of finance ministers from the Americas and the Caribbean.

The Bush administration believes supply and demand issues, rather than speculators in financial markets, are the prime cause of record oil prices. But speculators have become a target on Capitol Hill, where lawmakers are mulling restrictions on swaps and bilateral trading in the energy futures markets.

Paulson conceded that speculation is one of many variables contributing to market moves, but said that by and large it can help provide efficiency in markets. Part of the problem, said Paulson, a former head of Goldman Sachs , is that people often don't understand how financial contracts work. Speculators and hedgers are on both sides of the market, he said.

"I didn't say it wasn't a factor," Paulson said. "I said I don't think it is a major factor and I don't think it is the driver."

Asked if enhanced regulation of energy futures is unnecessary, Paulson said, "I didn't say it was unnecessary."

"I'm not saying there's not room for improvement, we're studying this issue, and we're continuing to study it and looking at it very carefully," he said.

WSJ

Dantes, This is where Peak Oil figures into the scenario, and in a very big way. Why would speculators take the other side of the trade betting that prices are going to go down? I mean, a few would, but if institutions and independents understand there is a supply problem, they're going to bet on prices continuing to go up. I consider just about anything that the administration comes out with a perfect contrary indicator, that almost the exact opposite is true.

[smallpoxgirl]

Dantes, This is where Peak Oil figures into the scenario, and in a very big way. Why would speculators take the other side of the trade betting that prices are going to go down? I mean, a few would, but if institutions and independents understand there is a supply problem, they're going to bet on prices continuing to go up. I consider just about anything that the administration comes out with a perfect contrary indicator, that almost the exact opposite is true.

I've got a better question for you threadbear. Who is betting prices will go down? Every futures contract has a buyer and a seller. Somebody is taking the short side or the market would just dry up.

I think the other real fundamental problem here is what's a speculator? Is Exxon a speculator if they buy up contracts trying to defray costs of gasoline for retail supply 2 months from now? Is Southwest airlines a speculator for buying up enough contracts to supply their fuel needs for several years in anticipation of rising prices? Is a farmer with 10,000 acres of soybeans a speculator if he buys contracts trying to hedge against his rising cost of diesel? What about Joe sixpack that drops $8000 on a futures contract because he's tired of watching the dollars in his bank account wither away while his costs of driving and flying and feeding his family are going through the roof? Does it somehow make the situation better if you tell farmer brown and joe sixpack and Southwest airlines that they can no longer buy contracts and only Exxon is allowed to speculate in the oil market?

[copious.abundance]

Sorry, no "huge run up" today. Down $2.45.

[threadbear]

SPG, You're overcomplicating the very simple. It's not rocket science. Without transparency, the market can be goosed by a few players. It's those players, with huge piles of money and low margin requirements, who have to be held in check.

Greenburger, by the way, doesn't discount that oil supply is a factor.

"By any objective assessment, the crude oil market is now overwhelmingly dominated by speculation," Mr. Greenberger said. "One can easily see how Goldman Sachs, a huge trader in these markets, could confidently predict that oil will soon reach $200 a barrel." The Wall Street firm's prediction in May, not surprisingly, caused an immediate updraft in prices.
http://www.tradingmarkets.com/.site/new ... s/1713666/

An article I just read in the Star Tribune compares the ICE to the stock market prior to the crash of '29 with low margin requirements . It's a classic pumping operation.

[smallpoxgirl]

SPG, You're overcomplicating the very simple. It's not rocket science. Without transparency, the market can be goosed by a few players. It's those players, with huge piles of money and low margin requirements, who have to be held in check.

Never once in the history of mankind has a government regulation worked that way. Governments don't regulate people who make fat campaign contributions. It looks to me like what's going on is that they've decided that there is entirely too much money to be made in this oil gig and they don't want anyone except the oil barons cutting in on the action. They're absolutely not talking about killing the futures market. They're talking about limiting it to people in the oil business. Guess what, those are the very people most likely to be in a position to manipulate the market.

And you still didn't answer my question. Who is on the short side of those contracts and why? I bet at least 80% of small investors are long. So who's short? Oil companies? Hedge funds?

[threadbear]

SPG, You're overcomplicating the very simple. It's not rocket science. Without transparency, the market can be goosed by a few players. It's those players, with huge piles of money and low margin requirements, who have to be held in check.

Never once in the history of mankind has a government regulation worked that way. Governments don't regulate people who make fat campaign contributions. It looks to me like what's going on is that they've decided that there is entirely too much money to be made in this oil gig and they don't want anyone except the oil barons cutting in on the action. They're absolutely not talking about killing the futures market. They're talking about limiting it to people in the oil business. Guess what, those are the very people most likely to be in a position to manipulate the market.

And you still didn't answer my question. Who is on the short side of those contracts and why? I bet at least 80% of small investors are long. So who's short? Oil companies? Hedge funds?

I agree up to a point. And yes, I think you're absolutely right that a bit of a supply crunch was forseen and a bunch of people jumped on the future's bandwagon, including oil companies, and if there's any way they can keep the gig going, just like it is, they will. But I think the tone will change under international pressure for the long term and the big players know this, so they're making hay while the sun shines. Your view of oil corporations being the only dominant players here with a huge say in how it's going to play out is way too monolithic for me. They're only part of the picture. Do you think Wall Street and the financial industry is going to sit back and let the big players in the oil business destroy the stock market without screaming for regulation? I seriously doubt it.

Though buyers are generally motivated by the assumption prices will rise, it doesn't logically follow that the opposite is true; that sellers are predominantly motivated by the assumption that prices are going to drop. A future's contract can be sold and resold several times, trading into a strong market. Eventually someone is going to get burned, for any number of reasons. But every seller in the chain isn't motivated by the idea that prices are going to drop at any given time. He's just trying to make a profit from a transaction.

[smallpoxgirl]

He's just trying to make a profit from a transaction.

There are really only two ways to make money selling a futures contract. Market makers scalp. They sell the ask, buy the bid, make money off the difference, and try to stay out of directional positions. Everybody else who sells a futures contract needs it to drop if they're going to make money. Now it's true that some people use the futures market as a hedge. If an oil producer is worried that the price is going to drop, they may use the futures market to hedge out part of that risk. They may be willing to risk a small loss in the futures market to offset some of their risk from a bigger loss if the price of their product falls. Also people may be looking a different time frames. A day trader wants to get in, ride for a couple of hours, and sell before the closing bell. He doesn't really care if it's up over the next month as long as it's down later today.

If you're convinced the price is going up, there is absolutely no reason to sell futures. You might as well just give all your money to the nearest homeless person. At least he won't charge you a brokerage fee to take your money.