GG Posted June 24, 2011 Share Posted June 24, 2011 what about the PIIGS, Japan, UK, and US imploding and China slowing down, think that will make a difference. Totally different issue. TPS has been on a crusade that the evil speculators are mostly behind the large run up in oil prices. There's never been an argument that ETFs & hedgies influence the upwrad price movement, the debate has been how much? I think that 5%-10% of commodity price can be attributed to the financial players. Yesterday's IEA move knocked 5% off oil prices, which should translate to about $.10/gallon of gas. Most of it is over reaction, as people need to unwind long positions & hedge to the downside. Nobody expects oil prices to fall to the low $80s, absent worseing economic news. Link to comment Share on other sites More sharing options...
TPS Posted June 24, 2011 Author Share Posted June 24, 2011 Totally different issue. TPS has been on a crusade that the evil speculators are mostly behind the large run up in oil prices. There's never been an argument that ETFs & hedgies influence the upwrad price movement, the debate has been how much? I think that 5%-10% of commodity price can be attributed to the financial players. Yesterday's IEA move knocked 5% off oil prices, which should translate to about $.10/gallon of gas. Most of it is over reaction, as people need to unwind long positions & hedge to the downside. Nobody expects oil prices to fall to the low $80s, absent worseing economic news. Ok mr spin dr.... My focus has been on institutional changes that have allowed investment flows to overwhelm futures markets, not speculators in the classic sense. Interesting how you NOW say that ETFs and hedgies make a difference. I don't know how many times I tried to convince you and DC of this, as you both argued this wasn't the case. Speculators ran into elasticity of demand in May, and now are being chased by the IEA. Prices have come down 25% in two months, after the Libya impact. I've said on several occasions that $85 is probably close to fundamental value. Given that we probably can't turn back the clock and reverse the influence from non-commercial interests (which used to be < 30% of trades, and is now > 70%), then the IEA SPR might be a useful tool to keep the speculative froth at bay. When Keynes was working on the design of the post-war (II) international financial system, one of his proposals was to create a global commodity reserve fund as a way to stabilize commodity prices over time. Since commodity prices are much more volatile than industrial prices because of supply shocks, the fund would buy in periods of excess surplus and sell in periods of excess shortage. The idea was to eliminate the extreme variability in prices which creates too much uncertainty for producers. More stable prices make planting and expansion decisions easier. You and Magox may disagree, but I think this could be a useful tool to help combat price volatility caused by financial flows. Link to comment Share on other sites More sharing options...
Magox Posted June 24, 2011 Share Posted June 24, 2011 (edited) There will always be speculative froth, but that cuts both ways for the bull and bear case. Prices get overheated and sometimes they get oversold, its the nature of the market. When we had all this crap happening in the middle east, there was an actual tangible supply loss that affected prices and the fear of more coming, the fear which you could call speculation was mainly to blame for the price increases. Now that the fear has subsided coupled with weak economic news and seasonol weakness at the beginning of the summer, it was only natural to see prices head back down. My guess is the price of crude in the short-term will be dictated by economic data not just here but through out the world. Edited June 24, 2011 by Magox Link to comment Share on other sites More sharing options...
GG Posted June 24, 2011 Share Posted June 24, 2011 Ok mr spin dr.... My focus has been on institutional changes that have allowed investment flows to overwhelm futures markets, not speculators in the classic sense. Interesting how you NOW say that ETFs and hedgies make a difference. I don't know how many times I tried to convince you and DC of this, as you both argued this wasn't the case. Speculators ran into elasticity of demand in May, and now are being chased by the IEA. Prices have come down 25% in two months, after the Libya impact. I've said on several occasions that $85 is probably close to fundamental value. Given that we probably can't turn back the clock and reverse the influence from non-commercial interests (which used to be < 30% of trades, and is now > 70%), then the IEA SPR might be a useful tool to keep the speculative froth at bay. When Keynes was working on the design of the post-war (II) international financial system, one of his proposals was to create a global commodity reserve fund as a way to stabilize commodity prices over time. Since commodity prices are much more volatile than industrial prices because of supply shocks, the fund would buy in periods of excess surplus and sell in periods of excess shortage. The idea was to eliminate the extreme variability in prices which creates too much uncertainty for producers. More stable prices make planting and expansion decisions easier. You and Magox may disagree, but I think this could be a useful tool to help combat price volatility caused by financial flows. Not quite professor, I never denied that financials had no impact on prices. The quarrel was over how much. IIRC, oil prices started going up as Mid East uprisings were growing and there was talk about a global economic recovery. Since that time, fear of a output slowdown is much less, while there's a real fear of a Greek avalanche taking the global economy back down. Link to comment Share on other sites More sharing options...
Magox Posted June 29, 2011 Share Posted June 29, 2011 Btw, where is the price of oil today? Link to comment Share on other sites More sharing options...
TPS Posted June 30, 2011 Author Share Posted June 30, 2011 (edited) Btw, where is the price of oil today? I would hope that you're smart enough to know that one day does not make a trend. I like this guy's take: Seeking Alpha On a related note, I just ordered this guy's book Oil's Endless Bid Edited June 30, 2011 by TPS Link to comment Share on other sites More sharing options...
Magox Posted June 30, 2011 Share Posted June 30, 2011 Of course I am, but I also realize that when a market is trending lower and even more bearish news is piled on top of the trend, that the market will usually head lower unless the market deems to have found a bottom. I think its pretty clear that the NEWS of the US opening up the reserves have already passed. Thats the the point that I am making, the only thing that will make the market head lower is bad economic news, NOT the release of the strategic reserves. Sorry TPS, when I said that this would have a neglible effect on prices, I was right, the market already proved that. If the market would of continued to have gone lower with good to average economic news, then you would of have been right. This is what I did for a living, and as I told you many times, the oil market isnt that concerned with US oil supplies, and speculation doesnt play nearly as big of a role in prices as you believe. Link to comment Share on other sites More sharing options...
Magox Posted June 30, 2011 Share Posted June 30, 2011 (edited) Btw, that article was horrible. I use to try to teach some of the brokers that in order to get information, make sure that the source isnt one sided in its view. This article overemphasizes speculation, and doesnt even place any counterpoints. No mention of continued global growth, or the fact that China has been increasing auto sales by an average of 30% year over year. I mean, does he really believe that this wont play a role in future oil prices? WHat about Indias growth, or brazils or any of the other developing nations growth. Or does he believe that global growth will come to a halt? If so, why didnt he mention it? Also, I didnt see any mention of our aging oil infrastructure. No mention of shortages of rigs. No mention of aging pipelines. No mention of declining oil field production in Mexico or Alaska. ALso, does he happen to believe that Middle eastern oil fields will be a secure place where oil will flow to WESTERN customers. Notice how I emphasize Western. What about the value of the U.S dollar. No where did I see his view of which direction the value of the US dollar is going to be heading. YOu cant possibly make a good bullish or bearish case without going in depth in which direction you believe the value of the dollar is headed. THis article blows balls. I could go on and on in how crappy this article was written. Edited June 30, 2011 by Magox Link to comment Share on other sites More sharing options...
TPS Posted June 30, 2011 Author Share Posted June 30, 2011 Of course I am, but I also realize that when a market is trending lower and even more bearish news is piled on top of the trend, that the market will usually head lower unless the market deems to have found a bottom. I think its pretty clear that the NEWS of the US opening up the reserves have already passed. Thats the the point that I am making, the only thing that will make the market head lower is bad economic news, NOT the release of the strategic reserves. Sorry TPS, when I said that this would have a neglible effect on prices, I was right, the market already proved that. If the market would of continued to have gone lower with good to average economic news, then you would of have been right. This is what I did for a living, and as I told you many times, the oil market isnt that concerned with US oil supplies, and speculation doesnt play nearly as big of a role in prices as you believe. Seems to me the point you are making is that a one-day move based on this weeks EIA report is a trend that supports your view. I'd say you are a little premature on that conclusion. Link to comment Share on other sites More sharing options...
Magox Posted June 30, 2011 Share Posted June 30, 2011 Seems to me the point you are making is that a one-day move based on this weeks EIA report is a trend that supports your view. I'd say you are a little premature on that conclusion. actually its not one day, its two days..but point taken. BUt I will stake my position based on this. If we get good economic news, the oil market will head higher, if we get bad economic news, oil will continue to head lower and if the economic news is in line with projects, I believe oil wont move much from here. If I am right with what I said over the next month, then that will pretty much prove my point that I made, that the release of the Oil reserves would have a negligible effect on the oil markets. Agreed? Link to comment Share on other sites More sharing options...
TPS Posted June 30, 2011 Author Share Posted June 30, 2011 actually its not one day, its two days..but point taken. BUt I will stake my position based on this. If we get good economic news, the oil market will head higher, if we get bad economic news, oil will continue to head lower and if the economic news is in line with projects, I believe oil wont move much from here. If I am right with what I said over the next month, then that will pretty much prove my point that I made, that the release of the Oil reserves would have a negligible effect on the oil markets. Agreed? The release of the reserves served their purpose, as a signal to speculators (my original point). Of course it won't have a long term impact on fundamentals, but it does serve notice that one might want to be careful about taking too big of a long position in the future(s).... Personally I think it should trade around $90 +/- $7.25 over the next several months. Link to comment Share on other sites More sharing options...
Doc Posted June 30, 2011 Share Posted June 30, 2011 I agree that it's a warning, but not anything that will effect any long-term decrease in oil prices. The supply of oil hasn't been an issue; it's speculating that there will be a disruption because of unrest in the Middle East. And that unrest hasn't subsided. Link to comment Share on other sites More sharing options...
KD in CA Posted June 30, 2011 Share Posted June 30, 2011 (edited) I think it's awesome the federal government is now overtly participating in short-term market manipulation. I'm sure none of the close buddies of the administration people who were in on this had any advanced knowledge of the release. Edited June 30, 2011 by KD in CT Link to comment Share on other sites More sharing options...
TPS Posted July 1, 2011 Author Share Posted July 1, 2011 I think it's awesome the federal government is now overtly participating in short-term market manipulation. I'm sure none of the close buddies of the administration people who were in on this had any advanced knowledge of the release. Now? Link to comment Share on other sites More sharing options...
KD in CA Posted July 1, 2011 Share Posted July 1, 2011 Now? I don't recall you previously cheerleading immediate and short-term market manipulations designed to enrich specific investors at the cost of other investors.....maybe I missed those threads? Link to comment Share on other sites More sharing options...
Magox Posted July 2, 2011 Share Posted July 2, 2011 TPS, you want to read a good and balanced article that contains real relevant data that pertains to the oil market and how it is priced? Here you go: Barron's article This paragraph that I pasted pretty much is the main driver of the oil markets over the past decade and most likely will continue to push prices higher over the next few years. Since 2000 -- despite the post-9/11 economic downturn, the global stock-market swoon of the early 2000s, the 2008 financial crisis and the 2008-2009 Great Recession -- global oil consumption has advanced by a yearly average of 1.1 million barrels per day, while non-OPEC output has risen by a yearly average of less than 0.6 million per day. In 2000, non-OECD demand amounted to 37.7%, or a little over a third, of the world's consumption; now, it amounts to 48.5%, or nearly half. Link to comment Share on other sites More sharing options...
TPS Posted July 2, 2011 Author Share Posted July 2, 2011 (edited) TPS, you want to read a good and balanced article that contains real relevant data that pertains to the oil market and how it is priced? Here you go: Barron's article This paragraph that I pasted pretty much is the main driver of the oil markets over the past decade and most likely will continue to push prices higher over the next few years. Thanks, I'll take a look after the holiday weekend. I think the key (from the quote) is that demand has been rising at a steady and predictable rate. Without knowing the details of the article, that doesn't lend support to the rapid run-up in prices in 2008; the dramatic drop; and run-up from last summer to April. I'm hoping to get that book I ordered too... Edited July 2, 2011 by TPS Link to comment Share on other sites More sharing options...
TPS Posted July 4, 2011 Author Share Posted July 4, 2011 TPS, you want to read a good and balanced article that contains real relevant data that pertains to the oil market and how it is priced? Here you go: Barron's article This paragraph that I pasted pretty much is the main driver of the oil markets over the past decade and most likely will continue to push prices higher over the next few years. I don't have a barron's subscription, so couldn't access full article. Link to comment Share on other sites More sharing options...
TPS Posted July 6, 2011 Author Share Posted July 6, 2011 (edited) I don't have a barron's subscription, so couldn't access full article. The CFTC just published data on daily trading in some 20+ futures markets. 95% of trades are made by "day traders" who do not hold open positions at the end of the day. As I've stated all along, commodity markets have been "financialized" and are now subject to the whims of investors. Day traders INvestors pulling out Edited July 6, 2011 by TPS Link to comment Share on other sites More sharing options...
ieatcrayonz Posted July 6, 2011 Share Posted July 6, 2011 Yes, we are both "Minskyites." Our economics are heavily influenced by the late Hyman Minsky. He's one of a dozen or so who predicted the crash. Where'd you see him? That's not really his name is it? Link to comment Share on other sites More sharing options...
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