Oil Futures Fake Out

[BridgeTheGap]

The CROOKS (allegedly, just indictments so far) at the NYMEX are running a scam and they have NO INTENTION WHATSOEVER of accepting delivery of even 1/10th of the 367M barrels they had as open contracts last week. In fact, Wednesday (June 8) they traded their contracts 454,043 times - isn't that amazing? It's a 123% daily churn rate! Of course, it's easy to churn 454M barrels of crude because the only sucker that ends up paying for all those fees is YOU, the end consumer of crude. All those fees are passed on to you as part of the price of oil.

Don't forget to thank Uncle Lloyd and Uncle Jamie (who was whining to Uncle Ben about how stopping him from screwing over taxpayers is bad for the economy), when you fill up your tank, as Exxon's CEO Rex Tillerson told us last week, without those speculators, a barrel of oil would be $70. You can see Jamie sweating as President Obama said a Justice Department probe will examine the role of “traders and speculators” in oil markets and how they contribute to high gas prices. “The attorney general’s putting together a team whose job it us to root out any cases of fraud or manipulation in the oil markets that might affect gas prices, and that includes the role of traders and speculators,” Obama said April 21st in Reno, Nevada. “We are going to make sure that no one is taking advantage of American consumers for their own short-term gain.”

The group, which includes representatives of federal agencies and state attorneys general, will check for fraud, collusion or misrepresentation at the retail and wholesale level, the Justice Department said in a statement last week. The group also will examine investor practices and the role of speculators and index traders in oil futures markets. One can only hope that Dimon's squeaky wheel will get the grease (prior to having a Government probe shoved up his ass!).

Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well which speculate, and let's not forget the Fabulous and Alleged Koch Brothers (I say "Fabulous and Alleged" because, if you don't, you hear from their attorneys, which is why no one ever says anything about that alleged scam!). In June 2006, oil traded in futures markets at some $60 a barrel and a Senate investigation estimated that some $25 of that was due to pure financial speculation. That would mean today that at least $40 or more of today’s $101 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and ICE exchanges in New York and London, it is more likely that as much as 60% of today oil price, is pure speculation.

http://www.zerohedge.com/article/oil-futures-fake-out

[ixion]

1. I've always said that Enron was a controlled test run for a larger model

turns out I was right.

[snot]

2. K&R'd.

[FreakinDJ]

3. Dems had a SuperMajority and didn't outlaw this practice

now that is fucked up

See ya all in Nov 2012 - its going to be an uphill battle

[the other one]

4. Bullshit. Contracts expire.

If a speculator does not take delivery he must sell the contract before expiration. This brings down the price.

So speculation also lowers the price.

The price of oil is probably cheap at this level, and speculation is the likely cause.

[Eddie Haskell]

5. Oil Futures

Pure speculation is what determines all futures markets. The traders are betting on what the future will bring and right now, they're betting on the demise of cheap oil. The solution is price controls and rationing. Is that what you want?

[BridgeTheGap]

6. Is this an either or situation? I don't think so. How long has oil been traded on the commodities

market? 1999 or so, I think. So before that we had price controls and rationting? I believe that WWII was the last time gas was rationed in the U.S.