U.S. Considers Curbs on Speculative Trading of Oil

U.S. Considers Curbs on Speculative Trading of Oil

www.nytimes.com

WASHINGTON — Reacting to the violent swings in oil prices in recent months, federal regulators announced on Tuesday that they were considering new restrictions on “speculative” traders in markets for oil, natural gas and other energy products.

The move is a big departure from the hands-off approach to market regulation of the last two decades. It also highlights a broader shift toward tougher government oversight under President Obama.

(visit the link for the full news article)

Where was the government as we were being bilked out of billions to the speculating that went on prior to our economic 'troubles'?

After reading the Rolling Stones piece about Goldman Sach's practices that may have contributed to driving the price of gas upwards of $4 a gallon, you would think they would have stomped this problem out much sooner. Assuming the want to give some relief (and serve some beneficial function for a change) to the American people.

This is the market that was never free, from the moment the profiteers infiltrated and virtually overthrew our government.

I am a little disappointed in the 'Obama-administration-as-savior" spin to the story. But the facts are there for us to sift out.

Maybe they can make up for their losses in the new speculation market, carbon trading.

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

The reason they want to do this is because somebody made alot of money a few days ago by creating false trade speculation and caused an all time high in the market.

Good article below thats worth a read.

$100 Oil due to False Speculation

No prizes for guessing who did it. My money is on USA.




[edit on 8-7-2009 by franspeakfree]

reply to post by franspeakfree


Aw. Give us a break will you? I grant that it may have been someone or some group within the US, but I doubt that the people of this country are willing to pay more for gas just to further fill the coffers of some speculators.

Frankly, my bet is on a transnational corporate entity, like the IMF. Or am I being obtuse?

In 1999, Bill Clinton Signed into law the Gramm-Leach-Bliley Act, allowing mega corporations, wielding ungodly sums of money, to merge together and begin speculating in the derivatives and OTC market. It also made the now famous credit default swaps legally impossible to regulate.

Adding to the volatility of the market, oil prices were soaring to never before imagined heights, due mostly to the speculative activities of institutions fomenting higher prices with their 10s of billions of capital and low margin requirements:

world consumption of oil at 87 million bpd was far exceeded by the "paper market" for oil, which equals about 1.36 billion bpd, or more than 15 times the actual market demand.
www.reuters.com...

A study of the oil market by Masters Capital Management was released which claimed that speculation did significantly impact the market. The study stated that over $60 billion was invested in oil during the first 6 months of 2008, helping drive the price per barrel from $95 to $147 per barrel, and that by the beginning of September, $39 billion had been withdrawn by speculators, causing prices to fall.
www.thetimesonline.com...

www.abovetopsecret.com...


Aww, but think about Exxon! How will Exxon feed it's family? They NEED to make more profits than any company in the history of the world, right?

reply to post by Maxmars


Ok I will give you a break, but come on, the cost of oil goes up (mysteriously) so the price at the pump goes up, who profits? it doesn't take a genius to work that out. Also to add banks across the board this week have been warned of rogue traders trying to tip the market through speculation. Watch this space.

Edit: Check this out

On Tuesday morning, the price of Brent crude rose about $2 a barrel in the space of an hour, hitting $73.50 a barrel before reversing sharply in volatile trade.

In that time, contracts for 16 million barrels of oil changed hands - 32 times the normal level - equivalent to double the daily production of Saudi Arabia.

Can rogue trading move a market?


[edit on 8-7-2009 by franspeakfree]

[edit on 8-7-2009 by franspeakfree]

reply to post by Kaytagg


Absolutely, and now it looks like that the derivatives have control over the large share of UK future firms aswell, basically 'they' hold and rule with the iron fist and there aint nowt we can do about it.

reply to post by Kaytagg


Do you believe that Exxon is an American company? It's what I meant by 'trans' national corporate entities.

This kind of market manipulation needs to be organized to be an effective means of ripping off the world. As far as I now, all the energy companies and their associated industries are transnational, if not in name, certainly in ownership. policy, management, and market activities.

This did not benefit Exxon alone.

reply to post by franspeakfree


True, but I think there are many ways to conceal market manipulation now, especially since mega-firms like Goldman Sachs are no longer required to report their 'programmatic' trading....

reply to post by Maxmars


Everybody wants this and it really makes sense BUT this is not capitalism..

Are Americans actually going to support market regulation

Originally posted by Maxmars
reply to post by franspeakfree

 

True, but I think there are many ways to conceal market manipulation now, especially since mega-firms like Goldman Sachs are no longer required to report their 'programmatic' trading....

Don't get me wrong there are upteen ways of market manipulation but by puting all the banks on alert means that they will be intensifying their searches on one particualr thing and in this case its False Speculative Trading. However, whilst they are looking i none direction, something else is happening in the other.

Also to add if we look at the current manipulation of false trading its clear that we can see that the USA - SAUDI ARABIA and the UK were involved. However, if we look even deeper you can bet your bottom dollar the companies that benefited were US owned (with saudi money)

[edit on 8-7-2009 by franspeakfree]

Originally posted by Dermo
reply to post by Maxmars

 

Everybody wants this and it really makes sense BUT this is not capitalism..

Are Americans actually going to support market regulation

Where are you getting the idea that regulation is bad, or new? We've always regulated some things. Then Reaganomics came along and posited that we should:

1. Reduce the growth of government spending (not cut spending, just don't spend as fast)
   
2. Reduce income and capital gains marginal tax rates (hedge funds need to make more money and rich people shouldn't pay taxes)
   
3. Reduce government regulation of the economy (Let Goldman Sachs, JP Morgan, AIG, Citi, etc, crash the world economy. After all, it wouldn't be a free market if they weren't free to wreck the entire thing.)
   
4. Control the money supply to reduce inflation (The Fed already does this, and it seems to be pretty unpopular amongst people.)
   

en.wikipedia.org...

Reagan, you're dead! Stop haunting us with your economics!

The government finally figured out a couple years ago that speculation was driving the price of oil/gas up, but did NOTHING after that!

PERHAPS 60% OF TODAY'S OIL PRICE IS PURE SPECULATION

A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”

What the Senate committee staff documented in the report was a gaping loophole in US Government regulation of oil derivatives trading so huge a herd of elephants could walk through it. That seems precisely what they have been doing in ramping oil prices through the roof in recent months.

The Senate report was ignored in the media and in the Congress.

The report pointed out that the Commodity Futures Trading Trading Commission, a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.”

Further, the CEA directs the CFTC to establish such trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.” Where is the CFTC now that we need such limits?

they seem to have deliberately walked away from their mandated oversight responsibilities in the world’s most important traded commodity, oil.

It's hard to comprehend why Congress didn't do something when this report was released, (not REALLY, it's all about the $$), when gas prices were soaring to around $4 a gallon!

Better late then never though!

I'd hate to see these same "oil speculators" manipulate the price of oil/gas again and make a killing at the rest of the countries/worlds expense!

reply to post by Maxmars


This give me "deja vu" remember when back last year at this same time we where paying over 4 dollars a gallon for gas?

Remember that the government was to go after speculators?

Nothing happen, now we are not paying as much for gas this summer, why should we believe that they will do what they didn't last year.