Oil speculation

[BYU71]

Originally Posted by MikeWaters

you are starting to make sense.

LOL, an endorsement from Mike Waters. I will put that on my resume.

Noted economist and financial guru Mike Waters thinks I am starting to make sense.

[Tex]

Originally Posted by BYU71

Tex, the futures market is not the market. That would be like saying the options market is the stock market.

People talk about the need for hedging, OK fine, let those people who are legitimately in the business or a related business do the hedging. Not huge hedge funds whose sole purpose is to specualte on where a commodity is going to go.

Yes, I know what futures are. I've traded options.

My question is, why not? Have futures markets in other commodities (or options markets) driven prices nothing but up?

[BYU71]

Originally Posted by Tex

Yes, I know what futures are. I've traded options.

My question is, why not? Have futures markets in other commodities (or options markets) driven prices nothing but up?

Sure they have. You just haven't heard about them because they don't have the huge impact oil does on everyone. Did you hear about the Long Term Capital collapse in the late 90's. That was a result of speculators messing around in futures contracts.

A lot of people think the crash in '87 had a lot to do with program trading, which involved option trading vs owning or selling stock. If you remember what I have said before, which I don't expect you too, I have predicted each crisis we find out comes from crazy new hedge or futures type product.

Remember when this unraveling started coming in late last year. It started with hedge funds in big trouble, Bear Stearns had two that collapsed. Once that ball starts rolling it is hard to stop. Why is it hard to stop, because these dopes are losing some of their money but most of it is borrowed money from banks and exchanges.

Watch, I predict if oil keeps dropping hard we will hear about some big leveraged fund in financial trouble.

I don't care if future speculators get in their. They should just get in there with there own money, not borrowed money which inflates the demand.

[Mormon Red Death]

Tim Hartford (The Undercover Economist) explains why oil speculation is ok


http://www.slate.com/id/2195037/

[MikeWaters]

Originally Posted by Mormon Red Death

Tim Hartford (The Undercover Economist) explains why oil speculation is ok


http://www.slate.com/id/2195037/

For one thing, inventories don't seem to be rising. If the inventory data are correct, consumers were burning all that $135 oil.

This is not true.

BP's recent Statistical Review of World Energy points out that while few speculators have been betting on a spike in the price of heating oil, its price has soared even more rapidly than the crude-oil price.

Is he asking us to believe that the runup in crude has nothing to do with the runup in heating oil? As if crude is not the precursor to heating oil? Moron

He builds a strawman about short-selling and then knocks it down.

He doesn't address at all the huge influx of institutional money into the oil futures market (due to the GOP law), all these buyers that never have and never will actually take on oil shipments. I saw a report that in the last few years there has been an extra $200 billion poured into the futures market that in the stock market would not be a big number, but in the futures commodity market it is a HUGE number.

Sorry that slate piece is shoddy and does not address any of the arguments that others are making that huge influxes of money coming into the futures market is running up the price.

[shgrunewald]

Generally speaking, our resources are starting to become depleted like oil. Soon, they will run out and it will affect the economy.