posted August 05, 2008 04:14 PM            

Haven't you figured it all out by now that there's a new story line every day for why stocks and commodity prices didn't react as they predicted?

Guess not acoustic.

But, I'm sure you do remember that when these bloviating talking heads that reporters dredge up, out of which they attempt to make instant experts said crude oil might test $120 per barrel before rebounding....I said...before long $120 per barrel crude oil will only be a fond memory in the minds of oil futures traders and brokers.

Well acoustic, crude oil closed today at $118.67 and Brent Crude Futures closed at $117.44.

posted August 06, 2008 03:30 PM              

Because of its insanely high price (about $4 a gallon where I live) absolutely everyone I know is making a concentrated effort to use less gas. Two families I know have traded in their gas guzzlers for something with better mileage. One is considering buying a hybrid and another has decided against the Hummer he's talked about ad nauseum for the past 3 years. Now this is a bad thing? Aren't the powers that be, of both the conservative and liberal persuasion, always telling us to conserve resources, recycle, ease up on raping and pillaging the planet etc etc?

So, I'm supposed to be a good American and use less oil. Ok. But then, because of those insanely high prices and, oh I don't know, let's say foreign wars for instance, the very same folks who previously counseled conservation, freak out on my behalf and start scrambling to lower those gas prices by raising the Drill! Drill! Drill! banner or tapping our "emergency" fund, thereby allowing me to use more of the very thing of which I'm advised to use less.

hmmmm

Should I stop recycling too?

posted August 07, 2008 07:52 AM            

But seriously, though neither blonde nor a man ... I think the biggest issue is not so much that gas prices are so high but that they rose so quickly. Too quickly for the average person to make the necessary adjustments (and that's nevermind the wages versus inflation or the "we've known all along" issues).

So, imo, it's a good idea to keep gas prices low ... for now. Meanwhile, I'm pinning my hopes on a future without the need for so much/any oil or foreign resources. I don't desire a lack of a work force between now and then, though. And if anyone has got the answer to dependable, easy to access, and arguably inexpensive fuel resources ... really, this is the time to stand up and shout it from the mountaintops.

posted August 07, 2008 01:00 PM            

Well, since you insist on reducing this discussion to stereotypes, here's one for you.

One day a blonde was sitting out in a rowboat in the middle of a wheat field.

Another blonde drove by and stopped. She hollered out to the blonde in the rowboat:

"You're the reason we blondes have a bad name. If I hadn't just had my hair and nails done, I'd swim out there and kick your ass."

posted August 07, 2008 11:59 PM            

Drilling won't produce anything practical for years, and we're not in an emergency sufficient enough to warrant tapping the reserves. Some oil producing countries are currently in flux.

posted August 08, 2008 12:00 PM            

Plan on your lunatic Marxist pals transitioning America to ped power acoustic.

Try this one on for size.

Now, to business.

Current price of WTI crude...'West Texas Intermediate' is $116.67 per barrel...the benchmark crude most quoted. I make that down more than $30 from when Bush said..Drill, Drill, Drill. Brent Crude Futures are selling for $113.97.

Just since I started writing this post, WTI crude has fallen further...from $116.67 to $115.94.

Each oil futures contract is for 1000 barrels of crude...42,000 US gallons. Each 1 cent change in the price of oil is a $10 change in the value of the contract..up or down.

So, the simple math is that each and every oil futures contract has lost $30,000 since Bush said...Drill, Drill, Drill.

On the other hand, the moron O'Whiner O'Bomber says we could save as much oil as we could get from drilling...but inflating our tires and tuning our car engines. Bullshiiit.

This moron is so out of touch with reality he doesn't know there are known reserves of about ninety billion barrels of oil offshore...not counting a drop from ANWAR. 90,000,000,000 barrels is 3 trillion, 780 billion gallons of US crude oil known to be off US shores.

Now instead of drilling for 90 billion barrels of oil, this lunatic moron wants to release 70 million barrels from the US Strategic Oil Reserve. Note, that's 70 million not 70 billion. Note also that O'Bomber was against this before he was for it. As a flip-flopper, O'Bomber makes John Traitor Kerry look like the poster boy for stability.

70 million barrels is a 2 and a half day supply of oil for the US.

He says releasing 70 million barrels would reduce gas prices 2-3 cents a gallon..immediately.

Bush says...Drill, Drill, Drill and gas prices have fallen from $4.15 per gallon here to $3.71 per gallon. I make that 44 cents per gallon..less...and not one drill bit has touched the ground...yet.

posted August 08, 2008 02:48 PM            

I set conditions under which crude oil prices would fall and told you why they would fall.

Those conditions are starting to be met..Bush says Drill, Drill, Drill. McCain says..Drill, Drill, Drill. The American people say..Drill, Drill, Drill and oil futures contract holders wet themselves and start trying to sell out of their long positions. Only problem with that is that for every seller, there must be a buyer...and there are buyers but not at the high contract prices the current futures contract holders want. The price of oil is being bid DOWN. Chavez has lost billions. Iran has lost billions and so has every other producer nation lost billions when oil has fallen $30 per barrel.

Exactly what I said would happen has happened and so long as it appears the US is serious it's going to continue to happen.

Yet, you, your Marxist friends, including the bubble brained moron who wants everyone to inflate their tires...and not drill, continue to live in fantasyland.

posted August 08, 2008 05:00 PM            

quote:

---

And still no one agrees with your assessment of the reason behind the drop...acoustic

---

You're really reckless with the truth...not to mention you seem unable to relate cause and effect or do your homework before you decide to bloviate.

Tuesday, July 15, 2008
Bush Says Drill, Drill, Drill — and Oil Drops $9!
Larry Kudlow

In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.

Now isn’t this interesting?

Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.

Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime. Note***perceptions

The congressional ban on offshore drilling expires September 30, so that becomes a key date. A new report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratorium were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. They’re talking about 10 billion barrels worth off the coast of California.

There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.

So I repeat: Drill, drill, drill. Deregulate, decontrol, and unleash the American energy industry. Those hated traders will then keep selling oil as the laws of supply and demand and free markets keep working.

Bravo for Bush. Bravo for the traders.
http://kudlow.nationalreview.com/post/?q=NjMyNDljNTQ5MThjNWE3YTAzYWYzMmZmNDVmMjA0ZWY=]http://kudlow.nationalreview.com/post/?q=NjMyNDljNTQ5MThjNWE3YTAzYWYzMmZmNDVmMjA0ZWY=

So, who is Larry Kudlow:

LARRY KUDLOW
"Kudlow & Company"

Larry Kudlow is CEO of Kudlow & Co., LLC, an economic and investment research firm.

Kudlow is host of CNBC’s "Kudlow & Company," which airs weeknights at 7 p.m. He is the host of "The Larry Kudlow Show" on WABC Radio on Saturdays from 10:00 a.m. to 1:00 p.m.

Kudlow is a nationally syndicated columnist and also hosts his own blog. He is a contributing editor of National Review magazine, as well as a columnist and economics editor for National Review Online. He is the author of "American Abundance: The New Economic and Moral Prosperity," published by Forbes in January 1998.

Kudlow is consistently ranked one of the nation’s premier and most accurate economic forecasters according to The Wall Street Journal’s semiannual forecasting survey.

He is a Distinguished Scholar of the Mercatus Center at George Mason University in Arlington, Virginia.

In 2005, New York Governor George Pataki appointed Kudlow the chairman of the New York State Tax Reform Commission.

For many years Kudlow served as chief economist for a number of Wall Street firms. Kudlow was a member of the Bush-Cheney Transition Advisory Committee. During President Reagan’s first term, Kudlow was the associate director for economics and planning, Office of Management and Budget, Executive Office of the President, where he was engaged in the development of the administration’s economic and budget policy.

He is a trusted advisor to many of our nation’s top decision-makers in Washington and has testified as an expert witness on economic matters before several congressional committees. He has also presented testimony at several Republican Governors Conferences.

Kudlow began his career as a staff economist at the Federal Reserve Bank of New York, working in the areas of domestic open market operations and bank supervision.

posted August 09, 2008 03:48 PM            

Are you able to reference the Sanford C. Bernstein report by providing a link? I ask because it seems that every Republican blog has grabbed on to Kudlow's article, but not a single one including Kudlow has referenced where Bernstein (or former oil man Munchie of Bernstein) said any such thing. In fact, Congress lifting the moratorium will not produce oil from California within a year. California has it's own moratorium on offshore drilling, which our Republican Governor Schwarzenegger is intent on upholding.

Kudlow himself is a partisan Republican as you outlined (and I highly doubt the assertion that he's ranked as one of the nation's premier and most accurate economic forecasters according to the Wall Street Journal. He doesn't even claim that of himself.). Kudlow, if you read him, while agreeing with your assessment on Bush affecting the price of oil, can't stop himself from acknowledging that flagging demand has contributed to the decrease in prices, which is what I've quoted from analysts since this conversation started.

posted August 11, 2008 11:47 AM            

On the other hand, you're wrong, as usual.

All anyone needs believe to believe what you claim to believe about the reason for the large drop in oil prices....IS TO BELIEVE THAT A 2% REDUCTION IN US OIL USAGE DROPPED THE WORLD PRICE OF OIL $32 PER BARREL.

In other words acoustic; a 2% reduction in American oil useage dropped the world price of oil 21%. Sheer lunacy.

An analyst you most certainly are NOT.

Bush says...Drill, Drill, Drill and futures traders and brokers wet themselves and start selling off their long oil futures contracts.

O'Bomber says..."Inflate your tires and we can save as much oil as could be recovered from offshore drilling". Since that offshore oil amounts to about 90 Billion barrels, that makes O'Bomber another raving lunatic..or another math challenged leftist moron.

What would you know about what the Wall Street Journal has to say acoustic. There's no sense in you reading the WSJ at all since you wouldn't understand a word they have to say on markets or the economy.

So, why don't you show us right here acoustic...where Bernstein Reports or former oil man Munchie say Kudlow misquoted them and oil from California offshore deposits could NOT be online and producing within a year.

After all acoustic, if Kudlow is lying about what Bernstein and Munchie said, they'd be yelling it out from the rooftops..since the statement, if untrue, would damage their credibility.

"Sanford C. Bernstein is widely recognized as Wall Street’s premier sell-side research firm. Our research is sought out by leading investment managers around the world, and we are annually ranked at the very top of acknowledged arbiters. In independent surveys of major institutional clients, Bernstein's research is ranked #1 for overall quality, industry knowledge, most trusted, best detailed financial analysis, major company studies, most useful valuation frameworks, best original research, and most willing to challenge management. In Institutional Investor’s 2007 annual client survey, the leading survey by which analysts in our industry are evaluated, over 90% of our U.S. Analysts were recognized as among the best in their respective fields -- more than any other firm on Wall Street.

Since Sanford C. Bernstein was founded in 1967, research has been our calling card. The Bernstein research brand is defined by our renowned Blackbooks, reports known for their unbiased, in-depth company and industry forecasts. We have a community of Research Analysts who are acknowledged thought leaders that typically have years of experience in the industries they cover. Our reputation is for the very highest caliber of disciplined investment and industry analysis, and we have no conflicts of interests related to investment banking. We are a wholly-owned subsidiary of our buy-side parent, AllianceBernstein."

https://www.bernsteinresearch.com/BRWEB/Public/Login.aspx?ReturnUrl=%2fbrweb%2fHome.aspx
http://www.alliancebernstein.com/portal/home.aspx

Kudlow doesn't need your acceptance or approval of his expertise in his chosen field. His expertise and competence are front and center for anyone with 2 brain cells to rub together to see.

As I said, you are reckless with the truth acoustic and it shows in most everything you've said here.

posted August 11, 2008 03:32 PM            

Where do you get this 2% figure from?

You can't prove the assertion that he's "consistently ranked one of the nation’s premier and most accurate economic forecasters according to The Wall Street Journal’s semiannual forecasting survey," can you? Yeah, that's what I thought.

What does WSJ say about oil?

Oil Sinks Amid Conflict; Stocks Rise
By Peter A. McKay
Word Count: 792 |

Stocks clung to a small gain Monday as continued worry about shriveling demand nudged crude-oil futures prices lower, outweighing concern that the fighting between Russia and Georgia could crimp fuel supplies. http://online.wsj.com/article/SB121845508989529521.html?mod=hpp_us_whats_news

quote:

---

So, why don't you show us right here acoustic...where Bernstein Reports or former oil man Munchie say Kudlow misquoted them and oil from California offshore deposits could NOT be online and producing within a year.

---

posted August 11, 2008 05:27 PM            

Only the brain dead would question the credentials of one of the foremost markets experts and analysts in the world. It's sooo you.

Bush says...Drill, Drill, Drill.

McCain says...Drill, Drill, Drill.

The American people say...Drill, Drill, Drill.

Oil falls from more than $147 to close at $114.50 today.

O'Whiner O'Bomber says inflate your tires. Nancy Pee-lousi says she has a planet to save. Dirty Harry Reid says oil and coal are making us sick.

America says get your sorry demoscat as$es back to Washington, take care of business and Drill, Drill Drill.

quote:

---

Where do you get this 2% figure from?....acoustic

---

Not only are you reckless with the truth acoustic but you have a short attention span and perhaps amnesia. This from one of the articles you posted here...on this very thread, in an attempt to refute what I said about perceptions driving equity and commodity markets.

acoustic
Knowflake: posted July 17, 2008 06:02 PM
Crude closes below $130 on economic worries

Futures lose $16 in three days; natural gas tumbles 8% after inventories data
By Moming Zhou & Polya Lesova, MarketWatch
Last update: 3:21 p.m. EDT July 17, 2008SAN

"The Energy Information Administration reported Wednesday that over the past four weeks, U.S. motor gasoline demand has averaged 9.3 million barrels per day, down by 2.1% from the same period last year."
http://www.linda-goodman.com/ubb/Forum16/HTML/004296.html

Wise up acoustic. You lost this argument from the moment you entered the discussion...as usual.

Hahaha, a 2% reduction in US gasoline usage caused a 21% decline in world oil prices. Priceless.

One last thing acoustic. I'm not buying you a subscription to Bernstein Reports. Besides, you wouldn't know what they were saying anyway.

posted August 11, 2008 05:57 PM            

quote:

---

I'm not going to show you anything acoustic. You're the one questioning the credentials of Kudlow. Go and do your own homework.

---

Ah, the old, "Because I said so" argument. Yeah, we've seen the authority act over and over again. It's played out. Just like your crackpot theories, no one buys it.

Personally, I'm amazed that you can sit, and assert things you have no chance of proving as true or legitimate. Credibility must not mean much to you.

__________________________________

posted August 11, 2008 06:08 PM            

As for you acoustic, you can't even remember what you posted only a few days ago..as I proved by posting the 2% reduction in US gas usage...which the lame brained morons attribute to causing a 21% decline in world oil prices.

Bush says...Drill, Drill, Drill and oil futures contract holders run for the hills and..and try to dump those long contracts.

The lame brained morons have been predicting $150 per barrel oil and even $200 per barrel.

Bush says...Drill, Drill, Drill and puts them in the crapper. For every long oil futures contract, the holders have lost more than $30,000 since mid July.

Even the news that Russia attempted to bomb a oil pipeline carrying about a million barrels a day in Georgia couldn't prevent oil prices from going down again today.

So acoustic, you're simply wrong as usual. No part of your argument can stand the least inspection.

posted August 11, 2008 10:03 PM            

The rest of your post is typical nonsense. Like I said, we have someone bringing facts to the conversation, and we have you. We have hard data versus crackpot theory.

OPEC revises down global oil demand for 2008

2008-07-16 18:57:47

VIENNA, July 16 (Xinhua) -- The Organization of Petroleum Exporting Countries (OPEC) has revised down global oil demand to 86.81 million barrels per day for this year, 90,000 barrels lower than its forecast in June.

This is the fourth time OPEC has lowered its global oil demand forecast for this year. In its latest monthly report published Tuesday, the Vienna-based cartel also forecasted a daily demand rise of 0.9 million barrels in 2009, which represents a decline of0.1 million barrels from estimated growth in 2008.

The report said demand for OPEC crude oil in 2008 would average32 million bpd and, and in 2009, average demand would further decrease to 31.2 million bpd.

OPEC monthly oil prices reached a record high of 128 U.S. dollars per barrel in June, 7.5 percent higher than the previous month, mainly due to rising Middle East tensions, financial market speculations, supply concerns over a storm threat in the Gulf of Mexico and the continued fluctuation of the dollar, OPEC said.

Iran, the second-largest oil producer of OPEC, started testing long-distance missiles last Wednesday, deepening global concerns about the future stable supply of OPEC oil.

U.S. Federal Reserve Chairman Ben Bernanke said Tuesday the devaluation of the U.S. dollar to a certain extent pushed up oil prices.

Experts said the latest OPEC report indicated the cartel still sees no need to increase output in the short run. http://news.xinhuanet.com/english/2008-07/16/content_8556779.htm

US oil demand down from last year

15-05-08 US oil demand in April, as measured by deliveries of all petroleum products, rose a modest 0.2 % over year-ago levels, the first time this year monthly demand averaged higher than the corresponding month in 2007, according to API's Monthly Statistical Report. But year-to-date oil demand continues to lag behind 2007 levels.

US oil deliveries from January until April 2008 averaged 20.2 mm bpd, 2.4 % below the first four months of 2007. Despite rising prices, gasoline, distillate and residual fuel oil deliveries registered modest year-on-year increases in April while jet fuel demand posted another year-to-year decline.

"We have still seen declines for the year-to-date across all major products," said Ron Planting, manager, information and analysis, for API. "This is one of the reasons petroleum imports have been running nearly 4 % lower than a year ago."
US gasoline and distillate production continued its record-breaking pace in April as gasoline output averaged 8.9 mm bpd, up nearly 1 % from April 2007. Production of distillate, mostly heating oil and diesel fuel, averaged 4.2 mm barrels daily, or 1.7 % above year-ago levels. Refinery crude oil inputs averaged 15.15 mm bpd in April, up from March levels of 14.87 mm bpd. US refiners used 86.7 % of their operable capacity in April, down from year-ago levels of 88.2 %.

The US imported 13.18 mm bpd of crude oil and refined products in April, down more than 5 % from April 2007. Total crude imports averaged 9.81 mm bpd and refined products imports averaged 3.37 mm bpd.
Domestic crude oil production averaged 5.07 mm bpd in April, down 1.7 % from a year ago. It was the fifth monthly year-to-year decline in a row. Year-to-date production is running some 2.9 % below the same period a year-ago.

In April, crude oil inventories rose more than 7 mm barrels from end-March levels, putting them 1 % below the five-year historical average. Gasoline inventories fell from end-March levels to 212 mm barrels but remained 7.5 % higher than year-ago levelsand 6 mm barrels above their recent five-year average.
Distillate inventories ended April 3 mm barrels below end-March levels but 1.5 % above the five-year average.

Source: www.downstreamtoday.com / American Petroleum Institute
http://www.gasandoil.com/goc/news/ntn82509.htm

posted August 12, 2008 01:15 AM            

Your first article on oil usage said it was down 2.1% so acoustic...to be kind, I used the number you posted.

But what if it were down 4% or even 5%. That still wouldn't account for a 21% decline in world oil prices. Neither would a lagging US economy. Just for your information acoustic, the GDP in the second quarter doubled the first quarter of 2008 and that first 2008 quarter was a positive number...not a negative number. The US economy is picking up, so that's not the reason oil prices are going down either.

The fact is that world oil prices are what they are because of the moron demoscats in Congress and their refusal to permit domestic production increases or permit nuclear power..not to mention mining the vast oil shale deposits in Wyoming, Utah and Colorado...which are estimated to hold more than 2 trillion barrels of usable oil. More oil in fact than exists in the entire Middle East.

Bush isn't the only one who knows all this acoustic.

When Bush said...Drill, Drill, Drill; oil futures traders, brokers and oil producing nations wet themselves. The result is a $33 per barrel decrease in oil prices...and headed lower but not because of declining US oil usage.

Only those living in fantasyland believe even a 4% decline in US oil consumption would drive world oil prices down 21%.

Why don't you put your money where your mouth is and buy some oil futures contracts acoustic. I know some commodity brokers and traders who would be very happy to unload oil futures contracts on you. They heard what Bush, McCain, Republicans and the American people said and they heard it loud and clear.

posted August 21, 2008 02:54 PM            

A Few Speculators Dominate Vast Market for Oil Trading

By David Cho
Washington Post Staff Writer
Thursday, August 21, 2008; A01

Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.

But when the Commodity Futures Trading Commission examined Vitol's books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol's portfolio -- at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.

The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.

The CFTC, which learned about the nature of Vitol's activities only after making an unusual request for data from the firm, now reports that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on NYMEX, a far bigger share than had previously been stated by the agency. That figure may rise in coming weeks as the CFTC checks the status of other big traders.

Some lawmakers have blamed these firms for the volatility of oil prices, including the tremendous run-up that peaked earlier in the summer.

"It is now evident that speculators in the energy futures markets play a much larger role than previously thought, and it is now even harder to accept the agency's laughable assertion that excessive speculation has not contributed to rising energy prices," said Rep. John D. Dingell (D-Mich.). He added that it was "difficult to comprehend how the CFTC would allow a trader" to acquire such a large oil inventory "and not scrutinize this position any sooner."

The CFTC, which refrains from naming specific traders in its reports, did not publicly identify Vitol.

The agency's report showed only the size of the holdings of an unnamed trader. Vitol's identity as that trader was confirmed by two industry sources with direct knowledge of the matter.

CFTC documents show Vitol was one of the most active traders of oil on NYMEX as prices reached record levels. By June 6, for instance, Vitol had acquired a huge holding in oil contracts, betting prices would rise. The contracts were equal to 57.7 million barrels of oil -- about three times the amount the United States consumes daily. That day, the price of oil spiked $11 to settle at $138.54. Oil prices eventually peaked at $147.27 a barrel on July 11 before falling back to settle at $114.98 yesterday.

The documents do not say how much Vitol put down to acquire this position, but under NYMEX rules, the down payment could have been as little as $1 billion, with the company borrowing the rest.

The biggest players on the commodity exchanges often operate as "swap dealers" who primarily invest on behalf of hedge funds, wealthy individuals and pension funds, allowing these investors to enjoy returns without having to buy an actual contract for oil or other goods. Some dealers also manage commodity trading for commercial firms.

To build up the vast holdings this practice entails, some swap dealers have maneuvered behind the scenes, exploiting their political influence and gaps in oversight to gain exemptions from regulatory limits and permission to set up new, unregulated markets. Many big traders are active not only on NYMEX but also on private and overseas markets beyond the CFTC's purview. These openings have given the firms nearly unfettered access to the trading of vital goods, including oil, cotton and corn.

Using swap dealers as middlemen, investment funds have poured into the commodity markets, raising their holdings to $260 billion this year from $13 billion in 2003. During that same period, the price of crude oil rose unabated every year.

CFTC data show that at the end of July, just four swap dealers held one-third of all NYMEX oil contracts that bet prices would increase. Dealers make trades that forecast prices will either rise or fall. Energy analysts say these data are evidence of the concentration of power in the markets.

CFTC leaders have argued that speculators are not influencing commodities' prices. If any new information arises during the agency's examination of swap dealer activity, officials said they would report it to Congress.

"To date, the CFTC has found that supply and demand fundamentals offer the best explanation for the systematic rise in oil prices," CFTC spokesman R. David Gary said, reading a statement that had been crafted by agency officials. "Regardless of their classification . . . the CFTC's market surveillance group scrutinizes daily the positions of all large traders, both commercial and non-commercial, to guard against market manipulation."

Victoria Dix, a spokeswoman for Vitol, declined to answer questions. The firm, through Dix, released a statement that stated only that it had not been contacted by the CFTC about the reclassification of its business and that its trading status remained unchanged. CFTC officials said they do not typically contact firms that are reclassified.

On its Web site, the firm says it has $100 billion a year in revenue and describes its thriving global energy-trading business.

For most of the past century, regulators put limits on financial actors to prevent them from dominating commodity exchanges, which were much smaller than the bond or stock markets. Only commercial operations, such as farms, airlines, manufacturers and the middlemen that handle their trading activities, were allowed to buy nearly unlimited quantities. The goal was to allow these businesses to minimize the effect of price swings.

The first major change to this regulatory framework occurred in 1991, when Goldman Sachs, through a subsidiary called J. Aron, argued that it should be granted the same exemption given to commercial traders because its business of buying commodities on behalf of investors was similar to the middlemen who broker commodity transactions for commercial firms.

The CFTC granted this request. More exemptions soon followed, including one to the Houston-based energy trader Enron.

"When the CFTC granted the 1991 hedging exemption to J. Aron (a division of Goldman Sachs), it signaled a major shift that has since allowed investors to accumulate enormous positions for purely speculative purposes," said Rep. Bart Stupak (D-Mich.) Now, he added, "legitimate businesses that hedge and take physical delivery of oil are being trampled by the speculators who are in the market purely to make profit."

A second turning point came when Congress passed the Commodity Futures Modernization Act of 2000. The law formally allowed investors to trade energy commodities on private electronic platforms outside the purview of regulators. Critics have called this piece of legislation the "Enron loophole," saying Enron played a role in crafting it.

In the months after the act was passed, private electronic trading platforms sprang up across the country, challenging the dominance of NYMEX.

"Investment banks had been frustrated with the established exchange because they really were never able to get control of it," said Michael Greenberger, a law professor at the University of Maryland and a former staff member at the CFTC.

The most successful of the private platforms was InterContinental Exchange, or ICE, founded by Goldman Sachs, Morgan Stanley and a few other big brokerages in 2000. ICE soon opened a trading platform in London, allowing its founders to trade vast quantities of U.S. oil overseas without being subject to regulation.

The exemptions for swap dealers and the development of overseas markets allowed big brokerages to open the door for more hedge funds, pensions and big investors to move into commodities.

In the coming years, commodity investments by funds could grow to $1 trillion, veteran hedge fund manager Michael Masters said in testimony before the Senate earlier this year. In an interview, he said this trend could raise commodity prices for everyone in the coming years and "have catastrophic economic effects on millions of already stressed U.S. consumers."

Meanwhile, commodities have been good business for big Wall Street brokerages. Its commodity trades helped keep Goldman Sachs profitable during the credit crisis, said Richard Bove, a banking analyst at Ladenburg Thalmann.

"Business is lousy right now," Bowie said of Goldman Sachs. "Commodities and currencies are clearly the strongest business they have right now."

posted August 22, 2008 12:06 AM            

Believe it or not, I somewhat agree with the thrust of this article...actually, more than somewhat.

Private investors and market makers are normally seen to be in equity and commodity markets to provide liquidity. But in the instances cited, they seem to be driving the markets and that needs to be reined in. The thrust of recent rules and lack of oversight by regulators/overseers will have a tendency to drive the real liquidity makers out of the commodity markets. In most markets, there is a limit as to how many contracts a single entity can control. For instance, I could not...regardless of the size of my account...go short 10,000 contracts of corn or oil..or long either.

The fact there are other exchanges in foreign lands which are more or less uncontrolled complicates and perhaps lets some parties make an end run around US rules and restrictions. Perhaps we need more stringent controls over those who play fast and loose in the markets...if they are US entities...and an absolute prohibition on US entities buying and selling in those foreign exchanges.

BTW, I hate to say that but, there are some who are always chasing a buck, outside the rules and the rules be damned.

posted September 02, 2008 01:28 PM            

Bush says...Drill, Drill, Drill. McCain says...Drill, Drill, Drill. Palin says...Drill, Drill, Drill. The Republican members of Congress say...Drill, Drill, Drill and Americans say...Drill, Drill, Drill.

In spite of a hurricane rumbling around in the Gulf of Mexico where much of US oil comes from, in spite of those wells being shut down and evacuated due to hurricane Gustav and out of production; crude oil prices continue to plummet.

In spite of this, there are some who continue to insist that perceptions don't drive commodity markets. They think the news of the day...the ever changing news drives markets.

What these people don't understand is that futures commodity markets are not focused on the news of the day. Their focus is on the future price of the commodity at the exiration date of the commodity futures contracts they own.

These futures traders have heard...Drill, Drill, Drill and are looking down the corridors of the future. They've decided the non thinking demoscats are not going to be able to maintain their "no drilling" stance and the future trend in crude oil prices IS DOWN. They're getting out of their futures contracts by selling them off and going short at current prices.

posted September 09, 2008 03:29 PM            

Bush says Drill, Drill, Drill
McCain says Drill, Drill, Drill
Palin says Drill, Drill, Drill
The American people say Drill, Drill, Drill and

Crude oil on the futures market..BRENT CRUDE FUTURES..in fact broke under $100 per barrel today.

posted September 15, 2008 10:02 AM            

Bush says Drill, Drill, Drill
McCain says Drill, Drill, Drill
Palin says Drill, Drill, Drill
Republicans in Congress say Drill, Drill, Drill and
The American people say Drill, Drill, Drill AND

the price of crude oil has fallen from almost $150 per barrel to $92 on one of the oil futures markets.

Let's see, that's more than a 33% reduction in the world price of crude oil.

Of course, there are some know nothings who insist a 2-3% reduction in US gas usage caused a 33% reduction in the "WORLD" price of oil. These people will believe anything.

As P.T. Barnum said, there's a sucker born every minute.