[copious.abundance]

>>> LINK <<<

Jul 28, 2009, 3:06 p.m. EST
CFTC considers strict position limits in energy trading
By Moming Zhou, MarketWatch

NEW YORK (MarketWatch) -- Commodity Futures Trading Commission Chairman Gary Gensler said Tuesday that the futures-market regulator "must seriously consider setting strict position limits in the energy market."

Gensler, in an opening statement of a CFTC hearing, said he has called his staff to research and outline "every authority available to the agency" to protect the markets and the public.

"Every option must be on the table," said Gensler, who worked for Goldman Sachs for nearly 20 years and was confirmed in May by the Senate to lead the CFTC. "We should apply consistent, across-the-board regulations to all futures-market participants."

According to law, the CFTC has broad authority in setting limits on the amount of positions a trader can take on a futures exchange. The CFTC doesn't have to prove that there is excessive speculation in a market before setting the limits.

[...]

[mefistofeles]

Good luck the Japanese tried that with in the 80's. They were unable to prevent traders from trading Japanese stocks outside of Japan, they simply went to Singapore. This sort of thing will only hurt the US Market because if these jokers can actually limit what traders can do they will simply take their marbles and play somewhere else. It's almost like Sarbox, IPO offerings starting moving from New York to London as a result. Don't regulators ever learn?

[eastbay]

.... and like no one other than US investors trades in energy. Silly.

[joewp]

They're just going to make it hard or impossible for a little guy to do any energy trading. They'll make sure there's plenty of loopholes wide enough to drive a billionaire through.

[copious.abundance]

Guess this must be a first step, or somthin'

LINK

Jul 30, 2009, 3:22 p.m. EST
CFTC to report ICE oil positions in weekly data
Moming Zhou

NEW YORK (MarketWatch) -- The Commodity Futures Trading Commission said Thursday it will report positions of West Texas Intermediate crude oil futures held by traders on the ICE Futures Europe exchange. The first publication of this data will be shown in the July 28 Commitments of Traders report, to be released on Friday. WTI crude is a type of light, sweet crude oil that's also used by the New York Mercantile Exchange as the underlying commodity of the exchange's oil futures.

[smallpoxgirl]

They're just going to make it hard or impossible for a little guy to do any energy trading. They'll make sure there's plenty of loopholes wide enough to drive a billionaire through.

The big issue anyway is all the multinational corporations trying to hedge their energy costs. At the same time that all the airline CEO's were screaming like little girls about the horrors of energy speculators, they were all buying oil futures like crazy. The blame the speculators game is a smoke screen. The real problem is that our energy supplies are stretched very tight, and if a significant number of the end users panic at the same time and try to hedge themselves, spikes result.

[TheDude]

Scarce Whales: Blaming Oil Speculators = "I Don't Know"

Blaming volatility on speculators is a face saving way of admitting that the blamer has no idea what is going on in physical oil markets. Physical oil supply and demand explain EVERY price move in oil. As mentioned previously, blaming speculators is not simply wrong, it is dangerous. It is dangerous because it falsely diagnoses the challenges global oil supply is facing.

There is absolutely no need to change US oil markets. Yet such change now seems likely. Politics is about to raise oil prices in the US and lower them for the rest of the world.

My estimate is that certain proposed restrictions in the US will add between 25 to 50 cents per gallon onto US pump prices in the short term (1-2 years) and much more later. US price increases will subsidize price falls in other countries. This is going to hurt US business and consumers to the advantage of other nations. Each US household will transfer up to an additional US$2,000 overseas each year. A woeful vengeance is being extracted by the uninformed. Preventing such a situation was the reason for writing Oil 101.

[Graeme]

CFTC Belatedly Discovers the Speculative Oil Bubble

While a very tight supply cushion at the time of 1-1.5m b/d certainly supported prices in the $90-100 range, what amazed me was the overwhelming consensus among regulators including the CFTC and academics such as Paul Krugman that prices were being driven purely by fundamentals as they soared another $50 in a matter of weeks. That view has now changed radically, and both the CFTC and the FSA in the UK are investigating the oil market with a view to imposing position limits on traders, encouraged by the oil industry itself and key users like airlines who have been whipsawed by the extraordinary volatility of the past year.

seekingalpha

[Outcast_Searcher]

It's clear that no one knows how much speculation might affect oil prices in the short term (any more than we know what the near term oil price will be). SO WHAT if they do affect it significantly in the short term? In the long run, supply/demand and especially ANTICIPATED supply/demand will be the drivers for (average) oil prices.

Every time some elected idiot from Washington cries about speculators when oil prices spike, I ask the same question -- "Why the hell aren't you spouting ACCOLADES when oil prices get nice and low? If speculators truly control oil prices, then don't they deserve America's thanks when they produce wonderful price relief? (You A**hole!!!)"

It's too bad these morons don't learn something from sources as obvious as CSPAN. I remember watching a CSPAN congressional inquiry with some of the folks who officially supervise oil price commodity futures a year or so ago. These guys seemed BRILLIANT and extremely competent, and answered all questions in a very knowlegeable and straightforward manner. I remember thinking that THIS is the kind of mind it would be ideal to elect as our leaders, instead of folks who are good at whining, lying, and looking good in a suit... I also remember thinking that anyone with a BRAIN should be convinced that these guys were watching for any "funny stuff" such as folks trying to corner the oil futures markets, AND had the teeth in the rules to force them out of their positions if they tried.

With all the recent chaos in financial markets, the ONLY legitimate concern (IMO) - which applies to ALL markets - is ensuring there is plenty of margin on hand to ensure if things get wild that the whole system doesn't come crashing down. That would go for S&P futures, oil futures, gold ETF's, etc.

But no, as The Dude's post pointed out, instead of our leaders reading books like "Oil 101" which very clearly spell out how oil markets and derivatives work -- our leaders pander to the public in order to "DO SOMETHING" and will end up making things worse. Fabulous.

[Bas]

They're just going to make it hard or impossible for a little guy to do any energy trading. They'll make sure there's plenty of loopholes wide enough to drive a billionaire through.

The big issue anyway is all the multinational corporations trying to hedge their energy costs. At the same time that all the airline CEO's were screaming like little girls about the horrors of energy speculators, they were all buying oil futures like crazy. The blame the speculators game is a smoke screen. The real problem is that our energy supplies are stretched very tight, and if a significant number of the end users panic at the same time and try to hedge themselves, spikes result.

as always SPG comes through with her brilliant common sense

[Bas]

Scarce Whales: Blaming Oil Speculators = "I Don't Know"

Blaming volatility on speculators is a face saving way of admitting that the blamer has no idea what is going on in physical oil markets. Physical oil supply and demand explain EVERY price move in oil. As mentioned previously, blaming speculators is not simply wrong, it is dangerous. It is dangerous because it falsely diagnoses the challenges global oil supply is facing.

There is absolutely no need to change US oil markets. Yet such change now seems likely. Politics is about to raise oil prices in the US and lower them for the rest of the world.

My estimate is that certain proposed restrictions in the US will add between 25 to 50 cents per gallon onto US pump prices in the short term (1-2 years) and much more later. US price increases will subsidize price falls in other countries. This is going to hurt US business and consumers to the advantage of other nations. Each US household will transfer up to an additional US$2,000 overseas each year. A woeful vengeance is being extracted by the uninformed. Preventing such a situation was the reason for writing Oil 101.

I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

[smallpoxgirl]

I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

If you don't like it, find your own OPEC nation to occupy.

[Bas]

I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

If you don't like it, find your own OPEC nation to occupy.

LOL

[Outcast_Searcher]

I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

If you don't like it, find your own OPEC nation to occupy.

LOL

If you consider the military premium that the US's ongoing presence in the middle east long term, various wars, etc. implies - the US taxpayers are probably paying more for gasoline than Europe.

However, if the US public were allowed to SEE this by this huge cost being directly taxed into oil, the public might decide to reject these policies. (Wouldn't TPTB just love that).

Europe has been getting plenty for their gasoline taxes, including less pollution and a pretty impressive mass transit infrastructure.

In addition, Europe has had relative energy security for oil, under the umbrella of the US military. If anything, the US has been subsidising Europe's oil prices.

I think the time is rapidly approaching where if we're going to be the western world's mercenary force - we will need to send our neighbors a serious annual bill to help defray the costs. (This includes our hanging around with huge US bases in allied countries with tens of thousands of troops, just in case something bad happens from an unfriendly power). After all, if the US ends up de-facto bankrupt enough to have to greatly scale down the military, those troops are coming home anyway.

[Graeme]

Limits on Speculative Trading Needed to Protect Energy Markets, U.S. Regulator Says

The chairman of the Commodity Futures Trading Commission said on Wednesday that the agency wanted to impose new restrictions on so-called speculative traders, not to reduce price volatility but to prevent the energy markets from being dominated by a few huge investment funds.

“I believe that at the core of promoting market integrity is ensuring markets do not become too concentrated,” said Gary G. Gensler, the commission chairman. “I think we would all agree that if one party controls half the market, that party is more likely to lessen liquidity than enhance it.”

nytimes