Peak Oil - The Myth, The Legend, The Fraud
A certain blogger of note and intelligence, whom we read regular and agree with (mostly) and like, buys into the Peak Oil scam, and has recently dismissed Andy Xie of Morgan Stanley's claim that oil prices are the result of rampant speculators.
We have slayed the imaginary dragon called Peak Oil many a time on this blog, here we are going to do it again, and we will do so by analyzing only BRENT CRUDE as traded on the IPE.
No other discussion need follow as through the data you will bear witness to one of the largest fraud's & larcenies of all time.
Our blogging friend quotes COT Commitment of Traders data to dismiss Mr Xies claim. COT data covers the following exchanges:
Chicago Board of Trade
Chicago Mercantile Exchange
Chicago Board Options Exchange
Kansas City Board of Trade
Minneapolis Grain Exchange
Commodity Exchange Incorporated
New York Board of Trade
New York Mercantile Exchange
Global oil prices are determined, not by supply, not by disaster, not by terrorists, not by demand. They are determined by the futures and options contracts as transacted on the following exchanges:
The New York Mercantile Exchange (NYMEX)
The International Petroleum Exchange of London (IPE)
The Tokyo Commodity Exchange (TOCOM)
COT data DOES NOT cover the IPE or Tokyo Exchanges, only NYMEX. Our blogging friend quotes "the amount of spec long positions overall (COT data from NYMEX) is not significant. It is well within normal patterns. Thus point blank, Andy Xie is wrong to be blaming speculators for huges rises in oil prices."
His statement regarding NYMEX is correct, extending it to Mr. Xies claim does not do justice to the situation at hand. What our friend forgets is to follow the money, this can be done by examining the IPE and in particular BRENT CRUDE futures. Why Brent Crude?
In spite of the fact that Brent Crude now represents less than 0.4% of worldwide production, its "spot" price determines the price of 60% of global oil production. Quote from IPE web site: "IPE Brent futures are part of the complex used to price over 60% of the world’s crude oil and is truly a global benchmark."
Quote from IPE web site: "The International Petroleum Exchange of London Limited "The IPE" is a Recognised Investment Exchange. It is Europe's leading energy futures and options exchange."
"The IPE provides a highly regulated marketplace where industry participants use futures and options to minimise their price exposure in the physical energy market. Over $8 billion daily in underlying value is traded on the IPE (at current prices)".
All Time Trading Records IPE Brent Crude futures
Day: 230,922 - 10 Aug 2005
Month: 2,839,339 - Jun 2005
Year: 25,458,259 - 2004
Low: ($/bbl) 9.55 - 21 Dec 1998
High: ($/bbl) 68.89 - 30 Aug 2005
Open Interest: 401,137 - 12 Aug 2005
Front Month OI: 118,454 - 16 Apr 1999
An analysis of only BRENT CRUDE FUTURES contracts (not options) on ONLY the IPE exchange indicates the following:
327,000 barrels per day (2003 brent crude daily production rate) times 30 days = 9,810,000 barrels per month
9.8 million barrels per month times 12 = 117,600,000 barrels of brent crude oil per year.
401,137 contracts open interest Aug 12th times 1000 barrels per contract = 401,137,000 barrels of oil
2004 - 25 Million futures contracts times 1000 barrels per contract = 25,000,000,000 barrels of "virtual oil" controlled by futures contracts.
Open contracts exceed annual production by a ratio of 3.41 to 1.
Total annual barrels controlled by contracts exceed annual production by a ratio of 212 to 1.
Traders call futures contracts "paper oil": the contracts are a paper claim against oil, which is far in excess of the volume of oil produced and actually delivered at oil terminals on behalf of those contracts.
From the obvious mathematical ratios and pricing LEVERAGE represented above, it is readily apparent that OIL PRICES ARE MANIPULATED BY SPECULATORS, nothing more, nothing less.
Incidentally, the biggest oil derivatives traders which run trading on the IPE include Barclays Capital, Bear Stearns International, J.P. Morgan Securities, Deutsche Futures London, BP Oil International and Shell International Trading.
Get the drift yet? If not, refer back to the IPE web site statement "where industry participants use futures and options to minimise their price exposure in the physical energy market." Key phrases: industry participants, minimise price exposure in the physical energy market.
The traders transact a large volume of derivatives bets. Speculators purchase on the IPE and NYMEX exchanges, futures contracts; each single contract is a bet on 1,000 barrels of oil.
There is a second layer of leverage. At the London IPE, the speculator can buy a futures contract on a margin of lets say 3.8%.
That is, were the speculator to buy a single futures contract, representing 1,000 barrels of oil at, say, an oil price of $80 per barrel, then the contract represents $80,000.
However, the speculator pays only $3,040 for the premium of the contract—or 3.8% of the $80,000—which gives him control over the contract.
Through an investment of $3,040, the speculator controls 1,000 barrels of oil. This is how a small group of speculators, through leverage, control the world oil price.
Current U.S. oil refining capacity to below the level of 1980. The majors knew perfectly well that the demand for refined oil products, such as gasoline and jet fuel, would rise during the 1990s and the first decade of the 21st Century.
The Saudis offered to invest in constructing new oil refining capacity in America, but the offer was rebuffed. The majors rebuffing the Saudi's and reduction of refining capacity is in and of itself, a criminal act of negligence.
Valero, Premcor, Tesoro, and Ashland are making more than est. $15 for each barrel of oil that they refine. It should be stressed that the oil majors make 33% of their revenues from refining and marketing.
In conclusion, massive oil futures speculation and the deliberate reduction in U.S. oil refining capacity has pushed up the price of U.S. light crude oil.
Not supply, not demand, not terrorists, not natural disasters and certainly not the spoon fed pablum bed time story known as peak oil.
By this process, the wealth that owns the oil cartel, and related brokerage and banking houses, have tightened their grip on world energy supplies, and realized enormous profits at the expense of the gullible public.
Some of which loot has been deployed to prop up the bankrupt world financial system. Alas baby ducks, thats a horror story for another day.
In closing, once and for all, there is no peak oil, its pablum created by the intelligensia for the masses. Can you say NO to PEAK OIL? that's good, I knew you could.
To quote, In the year 1990, Leon Hess, (and if you don't know who he is you are in the wrong game), stated at a hearing held by the U.S. Senate Committeee on Governmental Affairs:
"I'm an old man, but I'd bet my life that if the Merc [New York Mercantile Exchange] was not in operation there would be ample oil and reasonable prices all over the world, without this volatility." CASE CLOSED.
$130 Oil Justified? No Way
Oil Price Redux
OIL: Demand, Production and Speculation
Peak Oil - The Myth, The Legend, The Fraud
Spreading "Peak Oil" Crack
"Peking" Oil, the Saudis and China
Peak Oil? Not!
Peak Oil? Not! Part Deux
Peak Oil? Not! - Update
Peak Oil Redux Part I
Peak Oil Redux - Part II
Peak Oil Redux Part III
Peak Oil Redux Part IV
Peak Oil Redux Part V
Peak Oil Redux Part VI
Peak Oil Redux Part VII
Peak Oil Redux Part VIII
The Blame for $135 a Barrel Oil
Blame it on Markman's Myopia or The Day They Burned Ol' Dixie Down - A "Peak Oil" Commentary
Another Peak Oil Cufuffle Series
We have slayed the imaginary dragon called Peak Oil many a time on this blog, here we are going to do it again, and we will do so by analyzing only BRENT CRUDE as traded on the IPE.
No other discussion need follow as through the data you will bear witness to one of the largest fraud's & larcenies of all time.
Our blogging friend quotes COT Commitment of Traders data to dismiss Mr Xies claim. COT data covers the following exchanges:
Chicago Board of Trade
Chicago Mercantile Exchange
Chicago Board Options Exchange
Kansas City Board of Trade
Minneapolis Grain Exchange
Commodity Exchange Incorporated
New York Board of Trade
New York Mercantile Exchange
Global oil prices are determined, not by supply, not by disaster, not by terrorists, not by demand. They are determined by the futures and options contracts as transacted on the following exchanges:
The New York Mercantile Exchange (NYMEX)
The International Petroleum Exchange of London (IPE)
The Tokyo Commodity Exchange (TOCOM)
COT data DOES NOT cover the IPE or Tokyo Exchanges, only NYMEX. Our blogging friend quotes "the amount of spec long positions overall (COT data from NYMEX) is not significant. It is well within normal patterns. Thus point blank, Andy Xie is wrong to be blaming speculators for huges rises in oil prices."
His statement regarding NYMEX is correct, extending it to Mr. Xies claim does not do justice to the situation at hand. What our friend forgets is to follow the money, this can be done by examining the IPE and in particular BRENT CRUDE futures. Why Brent Crude?
In spite of the fact that Brent Crude now represents less than 0.4% of worldwide production, its "spot" price determines the price of 60% of global oil production. Quote from IPE web site: "IPE Brent futures are part of the complex used to price over 60% of the world’s crude oil and is truly a global benchmark."
Quote from IPE web site: "The International Petroleum Exchange of London Limited "The IPE" is a Recognised Investment Exchange. It is Europe's leading energy futures and options exchange."
"The IPE provides a highly regulated marketplace where industry participants use futures and options to minimise their price exposure in the physical energy market. Over $8 billion daily in underlying value is traded on the IPE (at current prices)".
All Time Trading Records IPE Brent Crude futures
Day: 230,922 - 10 Aug 2005
Month: 2,839,339 - Jun 2005
Year: 25,458,259 - 2004
Low: ($/bbl) 9.55 - 21 Dec 1998
High: ($/bbl) 68.89 - 30 Aug 2005
Open Interest: 401,137 - 12 Aug 2005
Front Month OI: 118,454 - 16 Apr 1999
An analysis of only BRENT CRUDE FUTURES contracts (not options) on ONLY the IPE exchange indicates the following:
327,000 barrels per day (2003 brent crude daily production rate) times 30 days = 9,810,000 barrels per month
9.8 million barrels per month times 12 = 117,600,000 barrels of brent crude oil per year.
401,137 contracts open interest Aug 12th times 1000 barrels per contract = 401,137,000 barrels of oil
2004 - 25 Million futures contracts times 1000 barrels per contract = 25,000,000,000 barrels of "virtual oil" controlled by futures contracts.
Open contracts exceed annual production by a ratio of 3.41 to 1.
Total annual barrels controlled by contracts exceed annual production by a ratio of 212 to 1.
Traders call futures contracts "paper oil": the contracts are a paper claim against oil, which is far in excess of the volume of oil produced and actually delivered at oil terminals on behalf of those contracts.
From the obvious mathematical ratios and pricing LEVERAGE represented above, it is readily apparent that OIL PRICES ARE MANIPULATED BY SPECULATORS, nothing more, nothing less.
Incidentally, the biggest oil derivatives traders which run trading on the IPE include Barclays Capital, Bear Stearns International, J.P. Morgan Securities, Deutsche Futures London, BP Oil International and Shell International Trading.
Get the drift yet? If not, refer back to the IPE web site statement "where industry participants use futures and options to minimise their price exposure in the physical energy market." Key phrases: industry participants, minimise price exposure in the physical energy market.
The traders transact a large volume of derivatives bets. Speculators purchase on the IPE and NYMEX exchanges, futures contracts; each single contract is a bet on 1,000 barrels of oil.
There is a second layer of leverage. At the London IPE, the speculator can buy a futures contract on a margin of lets say 3.8%.
That is, were the speculator to buy a single futures contract, representing 1,000 barrels of oil at, say, an oil price of $80 per barrel, then the contract represents $80,000.
However, the speculator pays only $3,040 for the premium of the contract—or 3.8% of the $80,000—which gives him control over the contract.
Through an investment of $3,040, the speculator controls 1,000 barrels of oil. This is how a small group of speculators, through leverage, control the world oil price.
Current U.S. oil refining capacity to below the level of 1980. The majors knew perfectly well that the demand for refined oil products, such as gasoline and jet fuel, would rise during the 1990s and the first decade of the 21st Century.
The Saudis offered to invest in constructing new oil refining capacity in America, but the offer was rebuffed. The majors rebuffing the Saudi's and reduction of refining capacity is in and of itself, a criminal act of negligence.
Valero, Premcor, Tesoro, and Ashland are making more than est. $15 for each barrel of oil that they refine. It should be stressed that the oil majors make 33% of their revenues from refining and marketing.
In conclusion, massive oil futures speculation and the deliberate reduction in U.S. oil refining capacity has pushed up the price of U.S. light crude oil.
Not supply, not demand, not terrorists, not natural disasters and certainly not the spoon fed pablum bed time story known as peak oil.
By this process, the wealth that owns the oil cartel, and related brokerage and banking houses, have tightened their grip on world energy supplies, and realized enormous profits at the expense of the gullible public.
Some of which loot has been deployed to prop up the bankrupt world financial system. Alas baby ducks, thats a horror story for another day.
In closing, once and for all, there is no peak oil, its pablum created by the intelligensia for the masses. Can you say NO to PEAK OIL? that's good, I knew you could.
To quote, In the year 1990, Leon Hess, (and if you don't know who he is you are in the wrong game), stated at a hearing held by the U.S. Senate Committeee on Governmental Affairs:
"I'm an old man, but I'd bet my life that if the Merc [New York Mercantile Exchange] was not in operation there would be ample oil and reasonable prices all over the world, without this volatility." CASE CLOSED.
$130 Oil Justified? No Way
Oil Price Redux
OIL: Demand, Production and Speculation
Peak Oil - The Myth, The Legend, The Fraud
Spreading "Peak Oil" Crack
"Peking" Oil, the Saudis and China
Peak Oil? Not!
Peak Oil? Not! Part Deux
Peak Oil? Not! - Update
Peak Oil Redux Part I
Peak Oil Redux - Part II
Peak Oil Redux Part III
Peak Oil Redux Part IV
Peak Oil Redux Part V
Peak Oil Redux Part VI
Peak Oil Redux Part VII
Peak Oil Redux Part VIII
The Blame for $135 a Barrel Oil
Blame it on Markman's Myopia or The Day They Burned Ol' Dixie Down - A "Peak Oil" Commentary
Another Peak Oil Cufuffle Series
Comments