When the Index Speculators ruled the earth
We live in that (hopefully) brief moment when the Index Speculators ruled the earth and pushed oil from its new high of $135 a barrel to God only knows what price. AP
Oil prices rose above $135 a barrel for the first time Thursday…”Simply put, this is a market you cannot afford to be short in,” said U.S. analyst and trader Stephen Schork about Brent futures…Goldman Sachs last week revised its oil price forecast for the second half of 2008 from $107 to $141 a barrel. But some analysts saw the new target becoming a reality much sooner. “Futures are moving so fast that under the current volatility that goal could already be reached within the end of the week,” said a report by Olivier Jakob of Petromatrix
We’d really like to know what Goldman Sachs’ oil futures positions are, given its forecast and its top former officers (eg, Paulson and Steel) serving in the top positions in the US economy. Furthermore, we’d like to know at just what ridiculous price the administration will stop saying that oil prices continue to represent “fairly” the actual marketplace conditions of supply and demand, when demand is obviously getting destroyed every single day. Finally, of course, it would be nice if Congress stopped their silly lectures to the oil companies and started letting them get some of more of the 112 billion barrels of oil and 420 trillion cubic feet of natural gas that are right here at home.
May 23rd, 2008 at 12:37 am
It seems to me that Russia, Iran, Venezuala, etc. all have a stake in keeping oil prices high. What they are they doing with the billions of dollars they are making from their oil reserves?
They could kill 2 birds with 1 stone: they keep prices high by investing a few billions dollars in the oil market, and they hurt the US.
May 23rd, 2008 at 1:16 am
Hmmm…. The only commodities chart I’ve seen that resembles this is silver from 1980–the Hunt brothers. If someone were to attempt to corner the market on oil, what would that look like? Presumably it wouldn’t be necessary to hold ALL the physical oil available, just to hold the excess supply over daily requirements.
I doubt that the excess supply being held by Iran counts–apparently, that’s low-grade “sour” crude that they’re having trouble getting rid of. In order to count as cornering the market, somebody would have to be buying up all the physical excess sweet crude that comes on the market.
I’m not really suggesting this is happening, just noticing some similarities.
May 23rd, 2008 at 9:58 pm
I fear the index speculator could become a permanent fixture. We can ban them here, but where is it etched in stone that commodities must be traded in the USA? What if say, Dubai, decides to open a futures exchange? Moving the trade elsewhere could certainly be a possibility if we over regulate our markets.
June 14th, 2008 at 11:35 pm
Just a bit of history on the power of the index speculators…I researched the internet and found that a bill was sneaked through Congress in 1992 (before Clinton), and although ignorant of the proceedings certainly feel the bite of it now, with gasoline and commodity prices skyrocketing in the U.S.
We’d better do what we can to curtail the greedy few who practice this speculation or we’ll end up without a country.