As most of us has suspected, a few speculators dominate vast oil market

As most of us has suspected, a few speculators dominate vast oil market

www.msnbc.msn.com

Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.

But when the Commodity Futures Trading Commission examined Vitol's books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol's portfolio -- at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.

The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.

(visit the link for the full news article)

Well at least it's finally in the print media.

Like the rest of you out there, I've heard whispers about this since earlier this year when the oil prices went nuts.
As I have stated in previous posts, I couldn't understand how the price was getting jacked up so badly over seemingly unimportant world events.
Now the truth is finally coming out in the media. It's about damn time.
All of this contract hoarding was done without the knowledge of the regulators..wink, wink. The firm in question is a Swiss company called Vitol. The CFTC, which learned about the nature of Vitol's activities only after making an unusual request for data from the firm, now reports that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on NYMEX, a far bigger share than had previously been stated by the agency.

Simply unbelievable the greed that is showing here. How much is enough??

www.msnbc.msn.com
(visit the link for the full news article)

reply to post by wolf241e


Surely you're not complaining? Vitol was maximizing profits for its shareholders. That's what the market economy is all about.

If a few hundred million people end up struggling to get by and tens of millions are in danger of losing their homes, so what?

reply to post by pause4thought


Good morning P4T.

Chuckels back to you. Still grinning over here.

Some evidence finally surfaces and my guess is there will more evidence pointing in other directions as well.

so... what are they going to do about it and what will be the preventive measure for the future??

The CFTC had to see this in the making, long before it ever occurred.

reply to post by Grailkeeper


Yeah, maybe a secret payment back to the government, which they in turn give back to us, in the form of another stimulus check!!!

At least we would get something out of the deal.

It needs to end the speculation period. Eliminate these middle men, if they controlled 81% of the market, and of that 30% was speculation, then the price of gas which is currently at $2.89 * .81 = $2.34 Additionally, the price would drop further if you ended the speculation if its at 30%, most likely it is MUCH higher. $2.34 * .3 = .70. $2.34 -.70 = 1.64

Reply to Grailkeeper

so... what are they going to do about it and what will be the preventive measure for the future??

If the answer is 'Nothing' it makes a mockery of the whole idea that the financial markets are regulated. It would also suggest governmental complicity.

Don't hold your breath, though...

For the record...I posted this last night.

Speculator thread

REPEAT POST

Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.

The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.

The above is excerpted from their own website.

"Failure to carry out its primary function" comes to mind. As usual, the tax-paying consumers get to foot the bill for their reticence to do their job, to protect the marketeers rather than the consumers. Can we figure out why they would wait until after the horses are gone before they close the barn door?

CFTC Commissioners

* Acting Chairman Walter Lukken
* Commissioner Michael Dunn
* Commissioner Jill E. Sommers
* Commissioner Bart Chilton

Is it a coincidence that all of these commissioners hail from the world of Agricultural policy. These are the folks who worked together to create the situation in the American farming industry as we endured it during the past decades. Very "BIG' business friendly, all nominated and endorsed by the Bush administration.

I will leave it to our esteemed community to comment on what they know of these 'prime' players in the CFTC.