Oil, Gas speculation, out of control manipulation

[sammyg2]

I found a very interesting article that is spot on AFAIK and mirrors what I've said for quite a while, the speculators are controlling the commodities market and causing artificial gains that aren't justified. But the author says it better. I keep a close eye on the inventories and such and can vouch that his numbers and facts are accurate and verifiable. Maybe if we all complain we can get congress to actually pass a law that will do some good for a change by reeling in these big speculators:

Don't Tell Anyone, the "Fix" is in

April 16, 2008 7:27:AM ET
By Tom Waterman

New York, NY - Here we are at the middle of the week and so far, the commodity manipulators have done fine work thus far. New records in crude oil this week and now we're poised for a new record in gasoline. Overnight, the market is slightly higher for oil commodities, but when you read the wire services you can get a glimpse of what is coming later this morning.
The hype began in Europe and Asia and it's spreading to the U.S. this morning. Here are some facts.
First, crude oil inventories worldwide are at GLUT proportions. U.S. gasoline inventories are at GLUT proportions. Distillate inventories are adequate.
The very minor supply glitches that have occurred this week did nothing to change the fundamental weakness in world oil markets, much less the U.S. market where demand is falling fast.
"Recent production outages are causing particular concern in the present market amid longer-term worries over stockpile levels in major consumer countries, analysts said," according to one of the services. That's how out of touch the commodities markets are with physical markets. Physical trader continue to tell us they can get anything they want whenever they want in whatever volume they want, and have many choices available. And they do not anticipate that situation changing.
"Meanwhile, reports also emerged of minor supply outages in Nigeria, Africa's biggest oil producer, after rebels caused a fire at the Beniboye oil plants in the Delta State of Nigeria," reported one of the services.
Any reference to Nigeria is simply absurd at this juncture. We have heard through various sources that the outage was about 5,000 bpd. As we noted yesterday, Nigeria spills that much every day, or it's stolen.
Now, the "fix."
"An expected upswing in refinery runs should restrict the size of any crude oil build, but gasoline stockpiles were expected to have dropped by 1.7 million barrels, the analysts predicted, while stocks of distillates, which include heating oil, are seen falling by 1.5 million barrels."
If gasoline stocks fall by just 1.7 million barrels in the EIA report, that would be a dramatically bearish development. A decline of anywhere from 3.5 to 5.5 million barrels would not surprise us at all. When and if that occurs, the market will leap forward because of the "UNEXPECTED" decline in U.S. gasoline inventories.
The "fix" is in. In a market that does not move based on any fundamental reality, it's amazing how they can spin a "normal" event such as drawdown in winter grade gasoline, which always occurs at this time of year, and claim "fundamental strength," as a result.
Speculation is part of commodity trading, but not at the rate and influence it now boasts. It has reduced commodity trading to a casino game that the large hedge funds and commission houses win all the time. They have the strength to impose their collective will, force out smaller traders whenever they want and clean up on the other end. It has ended small and mid-sized hedging.
They use the wire services as their mouthpieces to promote their "book" helping to guarantee the steady flow of profits from a market that can only move higher, never lower. And it is out of control.

[legion]

On-the-take or sheep?

This will correct itself the second the speculators overbid the market, companies start buying spot instead, and the speculators are stuck taking delivery of crude.

[Jim Richards]

Originally Posted by sammyg2

Maybe if we all complain we can get congress to actually pass a law that will do some good for a change by reeling in these big speculators.

You sound like a socialist to me. What do you have against capitalism?

[Shaun @ Tru6]

It's not the oil companies or government or speculators who need to change. YOU need to change how and what you drive.

all we hear is liberals whining about how government needs to protect us.

[TheMentat]

Originally Posted by legion

On-the-take or sheep?

This will correct itself the second the speculators overbid the market, companies start buying spot instead, and the speculators are stuck taking delivery of crude.

... hopefully not followed by a big government bailout

[nostatic]

motorcycles get excellent gas mileage

[Jim Richards]

Self-reliant capitalists like excellent gas mileage.

[The Gaijin]

from the article above:

"First, crude oil inventories worldwide are at GLUT proportions. U.S. gasoline inventories are at GLUT proportions. Distillate inventories are adequate.
The very minor supply glitches that have occurred this week did nothing to change the fundamental weakness in world oil markets, much less the U.S. market where demand is falling fast...."

What part of rising prices leading to lessening demand is so hard to figure out? If anyone thinks $1.25 gas is your birthright enshrined in the constitution I suggest you move to the middle east. Oh wait, they dont have constitutions. But they do have cheap gas.

[Burnin' oil]

Originally Posted by nostatic

motorcycles get excellent gas mileage

Average mpg of motorcycles is 73% better than that of cars, but the average injury sustained in a motorcycle accident is 39% worse than average injury sustained in a car accident with resulting medical costs 52% higher and economic costs 61% higher, which results in a net higher operating cost of 46%, which includes the benefit of lower gas consumption.

[Joeaksa]

Originally Posted by Shaun 84 Targa

It's not the oil companies or government or speculators who need to change. YOU need to change how and what you drive.

all we hear is liberals whining about how government needs to protect us.

I drive a Honda Accord for most of my trips. It gets around 34 mpg.

The "fun cars" are for fun and on weekends or such. I have been a conservative energy user for years, even before it was popular. I save water, use solar energy at home and recycle like mad.

Sorry I am a conservative with some of my views but am doing all I can!

[tcar]

Originally Posted by Burnin' oil

Average mpg of motorcycles is 73% better than that of cars, but the average injury sustained in a motorcycle accident is 39% worse than average injury sustained in a car accident with resulting medical costs 52% higher and economic costs 61% higher, which results in a net higher operating cost of 46%, which includes the benefit of lower gas consumption.

...and of course, when you add in the death of of innocent coyotes, the number is even less beneficial.

[Burnin' oil]

Exactly. Except that the damage done by a motorcycle to an animal such as a coyote is typically 32% less than that done by a car and if the perpetrator is ecologically minded, the minimally damaged pelt is worth up to $120.00, which can offset the accident related expenses by up to 2.7%.

[Rikao4]

can one still pay with coyote pelts ?

Rika

[nostatic]

hey, I didn't get to keep the pelt. I should sue the State of CA. I think I need about 13% more.

[Jim Richards]

I picked up that pelt for a song (off key, no less). I've decided that speculation in pelts will net me 70% more profit than my Magic 8-ball collection.

[widebody911]

I found a very interesting article that is spot on AFAIK and mirrors what I've said for quite a while, the speculators are controlling the commodities market and causing artificial gains that aren't justified.

Irrational exuberance? Bubble?

[hardflex]

We need a "windfall speculator profits tax"

[sammyg2]

Originally Posted by The Gaijin

from the article above:

"First, crude oil inventories worldwide are at GLUT proportions. U.S. gasoline inventories are at GLUT proportions. Distillate inventories are adequate.
The very minor supply glitches that have occurred this week did nothing to change the fundamental weakness in world oil markets, much less the U.S. market where demand is falling fast...."

What part of rising prices leading to lessening demand is so hard to figure out? If anyone thinks $1.25 gas is your birthright enshrined in the constitution I suggest you move to the middle east. Oh wait, they dont have constitutions. But they do have cheap gas.

Did you actually read the article? Did you actually spend at least a little bit of time trying to understand what all those big words meant?
Maybe you should be the one to move to the middle east, maybe they can teach you reading comprehension and basic economics. You obviously didn't learn them here.

This is supposed to be a free market economy and the supply and demand are supposed to affect each other, eventually ending in equalibrium. The speculators are artificially driving up the prices when the supply and the demand say they should go down! Just in case you haven't been to a gas station lately, we have an over-supply, we have lessening demand, and AND RECORD PRICES! It isn't supposed to work that way.
If demand is down and supply is up, THE PRICE SHOULD GO DOWN INSTEAD OF UP!
When people artificially control and manipulate a market it takes away any semblence of a free market economy or capitalism. In most cases it is illegal but it looks like wall street has found a way to use the media to report their BS and make the market go the way they want it to. They get rich, others loose their butts.

There is one other interesting tidbit of info, the oil refining companies will be reporting quarterly earnings in the next few weeks and in all cases they will be significanty lower than last year. In at least one case that I know of, the refining company is going to report A LOSS!
I'm not talking about the companies who pull the oil out of the ground, I'm talknig about the companies that strictly make gasoline and diesel and jet fuel.

The 321 crack spread is about 1/3 what it was a year ago, yet the retail prices are significantly higher.
If the consumers are paying record profits but the people making the gas are not making much of a profit, who is?

[sammyg2]

Originally Posted by Jim Richards

You sound like a socialist to me. What do you have against capitalism?

When a group gets and uses the power to manipulate a market and artificially drives up the price for a commodity when the supply is up and the demand is down, that is not capitalism. If that group can control the price and make it go up or down as they please and they profit from that manipulation at the expense of others, that isn't capitalism. It's exactly the opposite.

I was amazed at how long my college professor spent covering the subject of college of cost, supply, and demand. It seemed so obvious and self-explanitory.
now I'm starting to realize why it took so long.

[speeder]

Just let us know when it's time to short Valero or Exxon-Mobil. I don't pay attention to those things.