$130 Oil Justified? No Way.
We proved empirically why oil hit $135 a barrel here, not urban myths and price boogeymen such as supply and demand or peak oil...
but a hefty 29 to 1 leverage on contracts for crude and 92 to 1 on Brent crude...
contracts for "virtual oil" THAT DOES NOT EXIST and CANNOT BE DELIVERED. Today, we get validation on our position.
Congress may outlaw elements of oil futures trading that lawmakers found distorted demand and contributed to the 69 percent surge in prices in the past year.
U.S. legislators are considering limits on the number of oil contracts an investor can hold and may increase disclosure requirements.
Speculators such as Goldman Sachs use the practices to bet on price swings, which may drive up prices,
though they have no intention of taking delivery of underlying goods.
Proposals being debated this week in the Senate would bring prices more in line with actual demand.
"Americans are being taken advantage of not only by OPEC but by speculators right here in our own country," says Senator Ted Stevens.
Investor control of contracts to buy crude oil in New York almost doubled in April from five years earlier as prices climbed.
The Associated Builders and Contractors, the Teamsters Union, the Air Line Pilots Association and American Trucking Associations:
"Sophisticated paper speculators who never intend to use the oil are driving up costs for consumers and making huge profits with little to no risk,"
On June 6, when oil gained $10.75 a barrel, 22 barrels of oil were bought on paper for every barrel consumed, they said.
Reyes Heroles, the CEO of Mexico City-based Pemex, the third-largest importer to the U.S.,
said in a July 21 interview that he agreed with analysts who have estimated the price of a barrel of oil would be close to $80.
Chief executive officers of 12 U.S. air carriers including Delta Air Lines Inc.'s Richard Anderson, AMR Corp.'s Gerard Arpey and UAL Corp.'s Glenn Tilton
in a letter to customers on July 9 "normal market forces are being dangerously amplified by poorly regulated market speculation."
Naturally, Goldman Sachs, Wall Street's most profitable bank, argued that the idea higher prices are part of a speculative bubble is "unwarranted."
And William Adams, a managing director at JKV Global, a trader of energy, grains and metals commments:
"The price reflects demand from China and India, not manipulation or excessive speculation."
The Nattering One muses... Of course scumbag Wall Street firms and traders will always deny the obvious truth,
but Senator Stevens knows, as Marlon Brando uttered in "The Formula", "Arthur, you've missed the point, we are the Arabs."
Most recently in congressional testimony...
Major oil company execs pegged the real market value of oil to be somewhere between $35 and $60 a barrel, the balance of the price being attributed to speculators.
Hattip to Bloomberg.
$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
but a hefty 29 to 1 leverage on contracts for crude and 92 to 1 on Brent crude...
contracts for "virtual oil" THAT DOES NOT EXIST and CANNOT BE DELIVERED. Today, we get validation on our position.
Congress may outlaw elements of oil futures trading that lawmakers found distorted demand and contributed to the 69 percent surge in prices in the past year.
U.S. legislators are considering limits on the number of oil contracts an investor can hold and may increase disclosure requirements.
Speculators such as Goldman Sachs use the practices to bet on price swings, which may drive up prices,
though they have no intention of taking delivery of underlying goods.
Proposals being debated this week in the Senate would bring prices more in line with actual demand.
"Americans are being taken advantage of not only by OPEC but by speculators right here in our own country," says Senator Ted Stevens.
Investor control of contracts to buy crude oil in New York almost doubled in April from five years earlier as prices climbed.
The Associated Builders and Contractors, the Teamsters Union, the Air Line Pilots Association and American Trucking Associations:
"Sophisticated paper speculators who never intend to use the oil are driving up costs for consumers and making huge profits with little to no risk,"
On June 6, when oil gained $10.75 a barrel, 22 barrels of oil were bought on paper for every barrel consumed, they said.
Reyes Heroles, the CEO of Mexico City-based Pemex, the third-largest importer to the U.S.,
said in a July 21 interview that he agreed with analysts who have estimated the price of a barrel of oil would be close to $80.
Chief executive officers of 12 U.S. air carriers including Delta Air Lines Inc.'s Richard Anderson, AMR Corp.'s Gerard Arpey and UAL Corp.'s Glenn Tilton
in a letter to customers on July 9 "normal market forces are being dangerously amplified by poorly regulated market speculation."
Naturally, Goldman Sachs, Wall Street's most profitable bank, argued that the idea higher prices are part of a speculative bubble is "unwarranted."
And William Adams, a managing director at JKV Global, a trader of energy, grains and metals commments:
"The price reflects demand from China and India, not manipulation or excessive speculation."
The Nattering One muses... Of course scumbag Wall Street firms and traders will always deny the obvious truth,
but Senator Stevens knows, as Marlon Brando uttered in "The Formula", "Arthur, you've missed the point, we are the Arabs."
Most recently in congressional testimony...
Major oil company execs pegged the real market value of oil to be somewhere between $35 and $60 a barrel, the balance of the price being attributed to speculators.
Hattip to Bloomberg.
$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
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