Oil

[scifos]

Excellent read, speculation has had an effect on prices. But I'm not so sure that speculation on oil is a bad thing. Who was it on this board that pointed out that the margin requirements needed to be raised?

[ParkTwain]

When there regularly is trading on contracts that together control more oil than can physically be delivered in the timeframe linked to those contracts, then that trading has become "pure speculation" because it is addressing nothing but paper and air and has become divorced from economic reality. That is not good for any marketplace and shows that the NYMEX oil futures market is out of whack, and that can be economically dangerous. This is not the way the U.S. should allow the "marketplace" to price the most strategic source of energy in the world.

[scifos]

(snip) (Oil is) the most strategic source of energy in the world.

What does "the most strategic source" mean?

[ParkTwain]

most important, thus most strategic to own/control

[DSteckler]

When there regularly is trading on contracts that together control more oil than can physically be delivered in the timeframe linked to those contracts, then that trading has become "pure speculation" because it is addressing nothing but paper and air and has become divorced from economic reality. That is not good for any marketplace and shows that the NYMEX oil futures market is out of whack, and that can be economically dangerous. This is not the way the U.S. should allow the "marketplace" to price the most strategic source of energy in the world.

Umm, Park...all commodity markets work that way. Nothing nefarious about it.

[ParkTwain]

Tell me that trading soybeans and trading oil have the same economic significance.

Tell me that it's a good thing that more contracts controlling more oil than actually exists are traded for a given period of delivery. You're saying that all commodities futures markets operate this way. I'll need to look that up, I suppose.

[DSteckler]

What I'm saying is that it's not unusual in the commodity markets for open interest to exceed the number of actual physicals that can be delivered. That's why there are commercials (hedgers) and there are speculators.

[lemonjello]

Wtf?

NB,

Please provide a link to a credible source that states that all muslims want to kill all Jews and Christians. LOL.

Do you seriously believe this? I'm sure there are people in the USA that do, but I thought most of the people on this board were more astute. I mean, some peepol have been to collage.

The Iranian President, obviously. You shouldn't need to ask. He just got through with a week-long conference entitled "The World without Zionism." Along with the rest of the Muslim world, his goal is to kill every Jew in the world. It is also the goal of the Muslims to exterminate everyone who is not a Muslim, i.e., that includes Christians, too. World domination is their goal.

I don't think President Bush is anywhere near that category, do you?

[lemonjello]

Berry berry bad man

Didn't Iran recently demonstrate a modified supersonic silkworm type anti-ship supersonic missile capable of being fired from a hidden hill location on the Iranian coast? They could easily pile up a couple of tankers in short order and the price of oil goes to ? If the US presses them too much on the nuke issue, even Bush should know those missiles can do more to the world economy than a local tactical nuke.

Also, please remember an additional fact about the ramifications of barking war-talk at Iran. Iran could effectively (but not forever) close the Strait of Hormuz through which passes not just some/all of the oil exported from Iran but also from all the other Persian Gulf oil terminals. So, messing with Iran is also messing with all the Persian Gulf oil (Bahrain, Dubai, UAE, Saudi, etc.) exported through the Strait of Hormuz. Why would Prez Bush want to mess with that in the eyes of the world community?

[Websman]

All Klingons want to kill Vulcans. Haven't any of you ever watched Star Trek? jeesh...

[lemonjello]

True. With all due respect to the military people here - the US did not defeat the Taliban alone, the Afghan allies did a lot of the work. The US just tipped the balance with money and some targeted bombing.

Bush hasn't invaded Syria (a harborer of terrorists, plus a participant in funneling combatants into/out of post-invasion Iraq) yet. Why not? Or was Afghanistan (widely known as a "failed state") that easy a mission to take on?

[lemonjello]

East African people also like those type of goats and I don't think they are necessarily Muslim. They say they like the chewiness.

True story.... I raised meat goats for several years. I have a neighbor who lives about four miles down the creek from me who is a Muslim. He married a local gal and her father gave them about five acres and they built a nice home. He owns a pancake house in Roanoke, he's a hard worker and a good family man. Periodically he would come up to my farm and buy a goat from me. Seems that whenever his family would visit from "up north" he would slaughter a goat and they'd have a goat roast. He was always very picky about the goat. He wanted to hand pick the perfect male, one that had it's testicles in tact. Not sure why? but I figured if my market was Muslims and they wanted "billies with balls" then I'd stop banding my billies.... So, I stopped banding my billies.lol.... ANYWAY.... His nephew, who helps me during hay season, told me that they use every part of the goat and it's a traditional thing....

[lemonjello]

Why johnny can't engage in price seeking behavior.

Commodities are notoriously difficult to manipulate. Google Hunt brothers and silver. Does it ever occur to any of the talking head pundits that the price of oil is building in a risk premium for the Iranians plinking a couple of tankers with their supersonic modified silkworms?

Believe it - if the "speculators" thought they could make money by shorting oil down to zero they would do it in a heart beat.

When there regularly is trading on contracts that together control more oil than can physically be delivered in the timeframe linked to those contracts, then that trading has become "pure speculation" because it is addressing nothing but paper and air and has become divorced from economic reality. That is not good for any marketplace and shows that the NYMEX oil futures market is out of whack, and that can be economically dangerous. This is not the way the U.S. should allow the "marketplace" to price the most strategic source of energy in the world.

[New-born baby]

Commodities are notoriously difficult to manipulate. Google Hunt brothers and silver. Does it ever occur to any of the talking head pundits that the price of oil is building in a risk premium for the Iranians plinking a couple of tankers with their supersonic modified silkworms?

Believe it - if the "speculators" thought they could make money by shorting oil down to zero they would do it in a heart beat.

Wow. You are right on the money.

[ParkTwain]

What I'm saying is that it's not unusual in the commodity markets for open interest to exceed the number of actual physicals that can be delivered. That's why there are commercials (hedgers) and there are speculators.

Yeah, I'm interested as to who wants to be on the other side of a contract to deliver nonexistent oil. But more accurately, I suppose what we're seeing today in NYMEX oil futures going up is a call option on Bush going to war again.

There are no rules to limit how much oil in aggregate an be contracted for in a given delivery period? Or is that figure also a "market" decision (i.e., left to NYMEX, who I'm assuming is writing the futures contracts)? The "market" doesn't prefer that the contract writers stick relatively closely to a realistic total number of barrels, give or take a few percents?