this just in - rise in price of oil has nothing to do with speculators

neb · 2008-07-23T10:54:43-04:00

The Commodity Futures Trading Commission (CFTC) just release a report showing that the rise in oil prices is based on supply and demand - not speculation. http://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/itfinterimreportoncrudeoil0708.pdf "The world economy has expanded at its fastest pace in decades, and that strong growth has translated into substantial increases in the demand for oil, particularly from emerging market countries. On the supply side, the production of oil has responded sluggishly, compounded by production shortfalls associated with geopolitical unrest in countries with large oil reserves. As it is very difficult to rely on substitutes for oil in the short term, very large price increases have occurred as the market balances supply and demand." "If a group of market participants has systematically driven prices, detailed daily position data should show that that group’s position changes preceded price changes. The Task Force’s preliminary analysis, based on the evidence available to date, suggests that changes in futures market participation by speculators have not systematically preceded price changes. On the contrary, most speculative traders typically alter their positions following price changes, suggesting that they are responding to new information – just as one would expect in an efficiently operating market." They also showed that more "speculators" were shorting oil in the first 5 months of 2008 than were taking long positions on oil - which means that if the market was driven by speculators that the price should have dropped during that time.

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17 years ago 09/11/2008 2:37pm EDT

re: CorreyD

CorreyD wrote:
http://news.yahoo.com/s/ap/20080910/ap_on_go_co/oil_speculation
Read it, weep, admit your stupidity and then SHUT UP Neb!

That report is such a JOKE! Did you even take a look at who is behind it? Masters Capital Management isn't exactly an objective group. Here is a little more about their CEO Michael Masters written in June.

http://nakedshorts.typepad.com/nakedshorts/2008/06/fisking-michael-masters.html

"according to his (Masters) most recent US Securities & Exchange Commission 13F-HR filings, his hedge fund portfolio is at least knee-deep levered long in US airline stocks and General Motors."

Hmmm - I wonder why he wants to blame speculators instead of admit that we have a tight oil market? Maybe because a lot of people lost a lot of money in his hedge fund - and he wants to show them that it's not his fault, so they might actually trust him with their money again.

17 years ago 09/11/2008 4:26pm EDT

re: neb

Neb, you're like one of those people, that can't see when your punching yourself in the face.... so you keep doing it. See ya tomorrow when oil's under $100.

Today we're at 68.7% of the price at $147

Are we using 30% less oil? NO

Did supply go up 30%? NO

ummmm but wait, then how are prices 31.3% lower?!?

17 years ago 09/11/2008 4:41pm EDT

re: pwned n00bs

Have you considered the shapes of the supply and demand curves? I haven't but this might explain part of the dramatic price drop.

pwned n00bs wrote:
Today we're at 68.7% of the price at $147
Are we using 30% less oil? NO
Did supply go up 30%? NO
ummmm but wait, then how are prices 31.3% lower?!?

17 years ago 09/11/2008 6:25pm EDT

re: pwned n00bs

pwned n00bs wrote:
Neb, you're like one of those people, that can't see when your punching yourself in the face.... so you keep doing it. See ya tomorrow when oil's under $100.
Today we're at 68.7% of the price at $147
Are we using 30% less oil? NO
Did supply go up 30%? NO
ummmm but wait, then how are prices 31.3% lower?!?

So, the percent price increase/decrease should correlate exactly with the percent increase/decrease in supply or demand?

You really have no idea what you're talking about.

In a free market things are worth what people are willing to pay. If there are two original folio's of Shakespeare's Hamlet in the world - and one is destroyed - do you think that the value of the remaining folio will increase by only 50%???

17 years ago 09/11/2008 6:55pm EDT

re: pwned n00bs

You know, I bet that most Americans (like the person below) fail to grasp basic supply and demand. Please pick up a microeconomics book and you will understand how a 30% increase in demand will not necessarily equate to a 30% increase in price. In fact, oil is usually literally the textbook case of this phenomenon.

pwned n00bs wrote:
Neb, you're like one of those people, that can't see when your punching yourself in the face.... so you keep doing it. See ya tomorrow when oil's under $100.
Today we're at 68.7% of the price at $147
Are we using 30% less oil? NO
Did supply go up 30%? NO
ummmm but wait, then how are prices 31.3% lower?!?

17 years ago 09/14/2008 8:55pm EDT

re: Neb

hey neb,

we're under $100/barrel!!!

RUN peak oil is here and it's driving the price down!

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