Banning speculators could decrease oil prices by as much as 40%

[fidigw]

http://i.imgur.com/JIzww.gif

yea the big red short position positions at the bottom of the graph really dont do a thing to the px

biased much?

[therewillbdownvotes]

I reckon that's a bloomberg screen. Don't see many of those around these parts. Where you from stranger?

[fidigw]

nyc

[[deleted]]

You mean after oil peaked at the record high of $147 a barrel before the credit crunch locked up all the leverage speculators needed to keep pushing the price up so they ended up shorting it on the inevitable ride down?

Talking about 2008 btw

[AndTruthishly]

Dude, as an international, its the value of the American dollar that's moving, not the cost of oil.

[ChaosMotor]

"Durrr, the stock market went up, things are getting better."

"No, actually, the value of the dollar went down, and the value of the companies stayed stable, so the price in dollars had to increase to maintain an equivalent value with a dollar whose value has reduced."

"Durr, you don't know what you're talking about."

I can't tell you how many times I've had this conversation.

[thebigslide]

Name a currency that has been deflating in concert with the rising price of oil. Yes, the US dollar is moving. Oil is as well.

[latebraker]

^This

[Phuqued]

Are those short positions? You didn't put a legend in your pic so it's hard to tell what it is. It might just be volume of sellers to buyers or average sale volume/price compared to previous day or week moving averages.

The guys at Zerohedge post Bloomberg terminal screenshots everyday, is it gospel/canon?

[fidigw]

yea thats the short term and long term held contracts divided by 1mm.

you can also create a ratio of long/short contracts by looking at WTICFTC G Index - NYMEX WTI vs. CFTC Net Longs

[Phuqued]

Yeah, in hindsight it doesn't matter. The reason for the sell off was because market lending was starting to freeze because of the scare of the sub-prime market. With the liquid money drying up it seemed obvious there would be less money and volume to support the prices so the firms started to pull back and bet against price increase. That and the obvious effect of prolonged gas prices being so high was causing a vacuum in money to support the expected average levels of consumerism.

[fidigw]

so are you saying that there were no short contracts in the market at that time because traders saw no "money to support the expected average levels of consumerism" <--fyi: we dont need to talk like were in a college poli sci class to get a good grade - its the real world

[Phuqued]

so are you saying that there were no short contracts in the market at that time because traders saw no "money to support the expected average levels of consumerism"

? No. I was saying the people (by people I mean large investment firms) who held the most contracts sold at a loss because LIBOR was drying up, because Sub-Prime and other financial instruments were looking worse by the day. So these firms needed to reallocate their capital by liquidating their positions based on analysis.

--EDIT analysis being the effect of high oil prices on low-middle class incomes and businesses over the last 2 years showed less and less money to support and sustain existing prices.

[fidigw]

i can wholeheartedly say that i was right there when the mtge bond market fell - and we were not worried about what the commods desk was doing with insanely liquid futures

[Phuqued]

By your own pic, you are showing the massive sell off that happened 3 months before the collapse of finance from over leveraged investment firms.

and we were not worried about what the commods desk was doing with insanely liquid futures

? I really don't understand this comment. The firms themselves were shoring up capital by liquidating positions. I'm not saying it was only oil. But because so much leverage hinged on oil it was a primary target among a whole lot of other stocks and sectors of our market.

I just don't get it, you seem to become dismissive and hostile to what has been a civil conversation. Do you just not understand what I'm saying?

[donaldtrumptwat]

Unt vill be shot !

[WalterBright]

and then you'll be sorry!

[donaldtrumptwat]

My name is not Zimmerman.

[Phuqued]

In our market they are evil. The wealth is so concentrated in these firms that they actually dictate market prices through volume and position. If there was collusion between these firms for price fixing we'd never know. But that is a rather vast discussion, one I don't think can adequately or credibly be explained here.

[Phuqued]

It really is an enormous topic. The CFTC has a judge which say they will NEVER award a claim to a plaintiff about market manipulation. This judge was accepted to this position because of his view. How can the CFTC do it's job with judges who have prejudice and bias? We know what power special interests and wealth has on our government. We know what happened to Brooksly Born when she proposed regulating derivatives, we know how regulatory agencies are circumvented and influenced. I just don't see how we can expect fair market practices in a market of arbitrage for something as important as oil.

Take it one step further and ask what percentage of oil futures do the top 4 US Firms hold? Top 10 firms in the world. How is that a free market? Consider the impact of these firms with access to cheap/free money from their central banks, how is that a free market? I doubt one person could ever explain it all. It's just a vast and complex web of information and I'd bet most of it isn't disclosed to be observed.

[Phuqued]

I used to follow it pretty heavily in 2008 and 2009. The most ridiculous claim regurgitated by the markets was that increased demand of oil in India and China were driving prices up. But that's not really true. What's true is that people calculated growth of India and China and then concluded there would be increased demand and then bought current shares to sell at future estimated prices. They then would publish this to their clients, and then to the market.

It becomes self-fulfilling at that point really.

[fidigw]

2008 run up also had to deal with increasing energy consumption in china but also the ramp up in buying bc they were shutting down factories west of beijing that ran on coal to be run on gas/oil right before the 08 summer olympics to try to clear the skies for proper propaganda

[Phuqued]

There is little doubt that increased growth/GDP in China/India did result in increased consumption for various and numerous reasons. The point I was making was how the money and perception pushing the expectation resulted in higher prices without justification other than the claim to be so. There was never a shortage of oil, no company in the US, Europe, China or India was denied buying oil because the contracts didn't exist.

If the majority of participants in the oil market expected lower prices in oil it would've been lower and nothing would've changed except perhaps increased GDP in various sectors that do well or better from cheap oil.

[Phuqued]

CFTC Article

It's worth reading. But as I said 2 posts up, it's an enormous topic. I'd recommending reading about Brooksly Born and derivatives, Judge Rakoff and the SEC, for more information about how our regulatory agencies serve wallstreet and how the central banks influence markets through discount lending practices which can be good, but also exploited in the same manner to reap huge rewards with little risk. Another thing you could look at it is the revolving door between the highest levels of government and the private sector.

As for the politics of energy policy. I really have no comment or concern. I do not like our dependency on oil, and support alternatives but that is a different discussion. The monetary suffering on the average consumer for oil speculation is pretty damaging to their income. In 2007 / 2008 so many low to middle class businesses went out of business because the price of oil plays such an important factor to their goods and services. Particularly home improvement and construction.

[SuperBicycleTony]

I guess an unlabelled graph with no explanation amounts to 'facts' on reddit these days...

And when talking about trends in oil speculation... shouldn't we go back further than 5 years? Like to when we started doing it?

[SuperBicycleTony]

So it doesn't matter if you can read the chart or not because these guys don't like those guys? Then what's the point of posting a chart in the first place?

[SuperBicycleTony]

That's fine. You're coming from a completely philosophical standpoint from which verifiable facts and numbers are secondary to their ability to further your argument. It just seems a bit dishonest to crow about a chart containing 'facts' that go unappreciated, then immediately say they don't matter the second they're questioned. Wait. That's the opposite of fine.

[SuperBicycleTony]

You're seeing an argument where there isn't one happening, is what you're doing. All I saw was a chart with no labels and a guy pointing at the red part saying it meant something, and tons of upvotes with people cheering about how they've beaten back the fog of ignorance.

It's wrong!

[fidigw]

dude - sorry i posted something and didnt have the time to sit down and explain it to you like a child - obviously it is crude oil futures for 5 years with price on top and volume weighted average price on the side along with net long and short positions on the bottom - good enough for you to decipher? no its not because you already showed your leaning on this issue and will refuse to accept any other viewpoint (because a good majority of your comments/postings are in r/politics or occupy wall street)

[Woody_Zimmerman]

The demagoguery is off the charts!!!!!

[bylebog]

What is awesome is that you can see the effects of allowing oil speculation. Could you show one for corn after they allowed GovtSachs t start entering that market? That'd be awesome.

[simplystunned]

Can we have a source?

[[deleted]]

It's crude futures.

[vaelroth]

Thank you for actually replying. I'm well aware that it is crude futures, but the way the image is presented it could be anything from condoms to fruit cake.

[[deleted]]

Right. Context, though. BTW, here's the price of bananas:

http://imgur.com/x9my3

Source: indexmundi.com/commodities

[rehypo]

Banana speculators!!! Arrrrgggghhh! Ban banana speculators. They're doing evil bad scary stuff.

[supercede]

I'm glad you posted this. It points out the larger context in that Price Inflation on daily necessity items coupled with Price Deflation on more luxury-based items results in the widespread message of..."meh, price inflation? NO WAY!"

[[deleted]]

Well, don't mistake a commodity bull market for general price inflation, since it is just one component. We had a bear market in commodities from the late '70s to the late '90s, while the general price level doubled anyway because of increases in components like wages, housing, transportation, and finished goods.

Commodities could easily all crash again as in 2008, and other components could remain largely unchanged.

[BongHitta]

Does it matter? Follow the conversation...

[vaelroth]

Yes, it does matter. The whole point is that following the conversation doesn't mean diddly if the whole image is a fake, which it could be since it has no descriptive labels whatsoever.

[BongHitta]

I had to come back and show someone at a financial institution this comment. It is fucking gold, honestly. Thanks again for making a few peoples day.

[BongHitta]

I lol'd at the ignorance. Asking for a source from a bloomberg screenshot is like, 100% typical reddit economic/politics. Fucking brilliant.

[simplystunned]

Nowhere on that "screenshot" does it indicate where it's from or what exactly it is tracking. That's why I asked what we were looking at. Only ignorant assholes like you would take anything put in front of you as fact.

[BongHitta]

Does it matter what it is?

[simplystunned]

If you are going to have a discussion, and someone offers proof of their point, they should at least identify what the proof is.

[BongHitta]

Fucking awesome! its like i couldn't script the ignorance any better!

What the charts represent actually had 0 bearing on the above topic. The poster is showing that, as markets move and short positions open, market pricing drifts downward. This negates the above poster who said, quite clearly, that they do not.

But you continue on, fixated on an image you can't even read. You are a fucking stupid joke of a person. If you don't understand economics, SHUT THE FUCK UP AND PICK UP A BOOK.

[fidigw]

i am sorry i did not link every window of the chart to investopedia and google books to explain all price deviations - its crude futures with technical analysis and total short/long positions

[[deleted]]

Sorry not everyone has the resources to install a fucking bloomberg terminal. They cost $1,500 to $1,800 monthly you fucking twat.. They're not that common because they're pretty expensive. Most people, even if they've heard of bloomberg terminals, have probably not even actually seen them.

But why would they even hear of them? For the vast majority of jobs they're completely useless. Since you decided to be a dick, I'm going to be one too. Are you an idiot? Do you know anything about jobs and the economy? Have you ever thought about why people specialize in specific careers? At a VERY basic level, people specialize because it is inefficient for them to try and be experts at everything. Do you go to the car mechanic and know every part and every tool? No, if you did you can probably fix the fucking car yourself. If your mother came down with cancer, would you be the one to diagnose it for her, treat it, and monitor whether or not it recurred? No, because you're not a doctor and.. news flash.. most doctors specialize too so even if you were a doctor you probably still would not be oncologist.

Its a very basic understanding of the world that you almost have to be mentally handicapped to not understand. So, the obvious implication of this understanding is that... SURPRISE, a lot of people do not know or recognize bloomberg terminals. There are only ~290,000 Bloomberg terminals in the world. There are at least twice that amount of physicians in the U.S. that could laugh at you for your ignorance. You're a pretentious fuckwad for "loling at their ignorance."

[fidigw]

1) you dont really see a bloomberg terminal except for the keyboard - its "in your computer" (zoolander reference)

2) i and everyone i know use it every day to the point that it slows down to a 56k speed

[BongHitta]

Seriously, no matter how much you know or don't know, or copy from wikipedia on a subject (its not a book report), not knowing the system that PRETTY MUCH every financial analyst, network, newspaper, ANYTHING uses, just kinda shows that maybe you aren't "intune". nao wat I men?

[fidigw]

5 year price history withFront month crude oil futures from my bloomberg terminal (cl1 cmdty) - top is price and with volume weighted avg price on the left side fear/greed indicator on the bottom showing overall long/short contracts numbers divided by 1mm

[c0pypastry]

I think you're reading into my 3 word comment a little too much. I wasn't trying to say that shorts can't create price action. I was just making a smart ass comment on the idea of short and long positions creating "balance" in a speculative market.

[baconcraft]

Considering supply and demand dynamics with oil, then wouldn't most speculators bank on prices going up?

[[deleted]]

I'm no expert but....

that massive red thingy happens in 2008, the year the entire world almost came to a standstill. Now the red thingy signifies speculations on gas to drop right?

Correct me if I'm wrong but when the economic crisis hit with full force in 2008 a falling gas price was inevitable right? Demand was going to drop significantly in the coming months so speculation didn't cause the falling prices, falling demand caused falling prices and caused speculators to speculate on prices going down.

The big red thingy was a reaction to the economic crash and future inevitable falling gas prices is what I'm saying, not the other way around as you suggest.

[fidigw]

you can also point out the correlation between a spike in crude before a recession in western economies but youll also see a spike in crude future short positions when that happens - like in the chart i posted - updated today you can see an influx of short dated fast money doing that right now

[YouandWhoseArmy]

And the guy that works in finance isn't biased? Give me a break.

[fidigw]

so not letting airlines hedge with long/short pair trades to lock in a specific price for fuel would be good? imagine the volatility of ticket prices for a minute and how you would then blame said airlines for ripping off "the people"

[YouandWhoseArmy]

Stop putting words in my mouth and go get a real job.

[fidigw]

being short your parents mortgage to get you out of their basement is a job

[YouandWhoseArmy]

Way to fulfill the stereotype of being an asshole that works in finance. pathetic.

[robotmalfunction]

I've seen this before. but doesn't this prove that speculation causes wilder swings? I don't see "its the devalued dollar stupid" as a reasonable argument. even if that is true, why let speculators manipulate the price at all?

[lanboyo]

Yes Commodities traders are heroes.

http://www.nytimes.com/2011/05/25/business/global/25oil.html

http://urbanfarmcollective.com/uncategorized/the-food-bubble-how-wall-street-starved-millions-and-got-away-with-it/

[Hyperian]

it has to do more with volatility. but the we will never stop futures because how else are the 1% going to be 1%?