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EScroogeJr (< 20)

So there is no bubble, huh?

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June 23, 2008 – Comments (15)

Panel Cites Surge in Speculative Oil Trades By Stephen Power and Ian Talley Word Count: 782

WASHINGTON -- Speculative traders' interest in crude oil has grown to the point that they now account for roughly 70% of all trading in West Texas Intermediate crude on the New York Mercantile Exchange, compared with 37% in 2000, according to an investigation by a congressional subcommittee that forms part of an escalating political assault on Wall Street's role in the run-up in oil prices.

The subcommittee's findings, based on data obtained from federal commodity-futures regulators, are the latest sign that Washington is gearing up to try to limit the role of hedge funds, investment banks and other speculative traders ...

15 Comments – Post Your Own

#1) On June 23, 2008 at 10:24 AM, lquadland10 (< 20) wrote:

See abit blog on this subject it was good. The enron loop hole.

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#2) On June 23, 2008 at 10:28 AM, lquadland10 (< 20) wrote:

abitarecatania's CAPS Blog Countdown: McCain, Gas Prices, and the Enron loophole

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June 22, 2008 – Comments (5)


via videosift.com

McCain's YouTube Problem Just Became a Nightmare

 

John McCain Gets Owned on Meet The Press

 

The Smartest Guys in the Room - California and Traders

 

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#3) On June 23, 2008 at 10:34 AM, Gemini846 (48.09) wrote:

Funny. I read a post in this very site this morning (From TMFdeej I think) talking about how futures only accounted for 1% net positive of the light sweet crude that refiners want for gasoline.

So which is it? 

My vote. Bubble - yes

Caused entirely by speculators - no.

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#4) On June 23, 2008 at 10:48 AM, LordZ wrote:

Scrooge I think your score answers your own question

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#5) On June 23, 2008 at 11:17 AM, TMFDeej (99.26) wrote:

Yep, I wrote it Gemini.  Here's the latest data from the very U.S. Commodities Futures Trading Commission that the geniuses in the Congressional pannel referenced.

"The weekly CFTC data for the NYNEX shows spec funds are net long 12,712 contracts of crude oil. This amounts to less than 1% of the entire open interest in crude oil.  In the aggregate, Spec. Funds are long 203,806 contracts vs. short 191,044 contracts for a net long of only 12,712 contracts. 

I don't see how anyone can make the case that speculators are driving the price of crude higher when spec funds are net long less than 1 percent of the entire open interest.  The CFTC report does not separate out Managed Funds and Index Funds for crude oil."

The government loves to blame the problems that their mismanagement has helped to create on mysterious speculators, but for the real cause of the problems they don't have to look any farther than the mirror.

But wait, I read that there is a bubble in the newspaper and my government told me that there is one...it must be true right.  HAHAHAHAHAHAHAHA.

Sorry for being so harsh, but this bubble talk is absurd.  Has oil gotten a little ahead of itself...probably.  But the willingness to blame our problems on an evil cast of caracters and to assume that oil will just magically drop to say $70 per barrel if the government passes more laws is just contributing to the problem.

Deej

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#6) On June 23, 2008 at 11:34 AM, Gemini846 (48.09) wrote:

What's that I hear. Oil is traded in Dollar Bills? The world markets want to value oil in something other than Dollars? Why.. devalued dollars?

Who could be responsible for that????

Must be the jews.. I mean speculators ya, burn them all.

Zieg Hiel!

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#7) On June 23, 2008 at 11:40 AM, GreenMycon (< 20) wrote:

I think Deej's post is quite solid.  Perhaps speculation is contributing to an artificually high price of crude oil, but how much higher is the artifical price than the true value of crude?  If you just look at the anticipated level of consumptions and the overall drop of readily available oil and production levels, it won't be long before the "true" value of crude sans speculation is at the current level now.

Personally, I feel the more likely bubble to be concerned about in the coming future is not the "oil bubble" (actually a non-bubble), but that of the renewable and alternative energies -- once money is seriously thrown behind it, be careful.

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#8) On June 23, 2008 at 11:55 AM, cubanstockpicker (< 20) wrote:

lets say that traders who want to play the oil market had to take delivery in order to play, oh and we went down with the whole leverage on trading to dropping one zero on the right.

How high would oil prices be then?

Want to tell me again speculators dont have a major part?

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#9) On June 23, 2008 at 12:14 PM, BoringIsNormal (69.72) wrote:

What's with the Anti Semitism, Gemini you're a total A@@, who do you think helped propp up the economy, funded half the Civil War, and helped make America what it is today?
True there are always the rotten apples, but you can't blame an entire race for something that  a few minors/independents have caused.
What I sense is jealousy and hatred!!!

 Look at what Israel did, their GDP growth is soaring YOY, they turned a desolate desert into one of the most flourishing economies, what other nation has done something like that?

 As we see with other Nations, all they do is Bitch and blame everyone else for their problems, the Jewish ppl go out and make something for themselves instead of bitching!

 Are you an Arab Jew Hater blaming your problems on the Jews?

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#10) On June 23, 2008 at 12:16 PM, BoringIsNormal (69.72) wrote:

Sry not the Civil War, the American Revolution, as well as cemetaries of Jewish Revolution and Civil war heros.

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#11) On June 23, 2008 at 12:16 PM, FourthAxis (< 20) wrote:

"traders who want to play the oil market had to take delivery in order to play" - Someone has to take delivery...are they paying too much?  Perhaps they should wait and buy at spot?  Oh, the spot would be more expensive?  Hmmm...I guess the futures market just worked again.  Hell, I bet you bought gas within the last week....maybe you should have hedged?  Ha Ha Ha

"the willingness to blame our problems on an evil cast of caracters and to assume that oil will just magically drop to say $70 per barrel if the government passes more laws is just contributing to the problem."

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#12) On June 23, 2008 at 12:26 PM, BoringIsNormal (69.72) wrote:

Sry not the Civil War, the American Revolution, as well as cemetaries of Jewish Revolution and Civil war heros.

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#13) On June 23, 2008 at 5:18 PM, cubanstockpicker (< 20) wrote:

Boring, I think Gemini was being sarcatic, I hope. Gemini, nesxt time put quotations or a smiley, because sarcasm doesnt translate on text or blogs. 

 Fourth, I am guaranteeing you that if there was just a small shift in policy like dropping the leveraged account from outrageous figures by half, there wouldnt be the excessive price runups.

I aint blaming anyone, but we have Bush standing up there saying we need to drill more oil, yet not one single permit of the almost 10,000 given since 1999 has been used, and of the 68,000,000 acres of land to be explored, they have yet to be touched. And please dfont give me a line that says they are not worth exploring. At 134 bbl, anything is worth sucking out of the ground.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=61301&t=01009063290283398430

Democratic Congresses response to BIG OIL NOT DRILLING

Why do you want all the stuff that has been set aside like ANWAR and offshore when you cant even justify the claim because you havent even started exploring where you have the right and the permit to?

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#14) On June 28, 2008 at 9:04 PM, sid187 wrote:

I would describe it not so much as a bubble, but a huge oily zit that keeps growing bigger and bigger and the more you squeeze it the more pus matters spews forth only to be replaced by more and more greed turned green that continues to build and when squeezed spews forth in ugliness.

 

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#15) On July 14, 2008 at 8:45 AM, XMFSinchiruna (27.14) wrote:

If the government wants to step in and limit something, they should place caps in who can use the word bubble and in what contexts.  Overuse of the word bubble is endangering the proper functioning of the markets, and threatening to dull the intellect of the investing masses, causing them to jump off the ship of the long-term secular bull market in commodities and into the shark-infested waters of... well... everything else.

I can't stand the word bubble!!!  I just performed a detailed statistical analysis inside my head, and found that the word is only properly used with predictive accuracy one time in every thousand times the word is uttered.

The 'bubble' travesty is closely related to the tragic misuse of the words oversold and undersold, overbought... etc.  How many pitches claim "this stock is way oversold, therefore it's cheap"?  These are incomplete thoughts, and often borrowed from the headlines or perhaps the Fast Money dudes.

I went through all this 'bubble' talk crap with gold after it corrected in mid-March.  Not to mention this one.

We are entering a phase of the oil bull which I believe will be characterized by increased volatility.  Long-term, the global competition for a finite resource will lead prices well beyond $150 to stay... but in the short-term the moves will be dramatic in both directions, IMO.  The same can be expected in all the commodities as the bull progresses... increased volatility will be a general trend.

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