Rick Santelli oil speculation debunk

[Xxsucram89xX]

This doesnt explain why oil went up and down so quickly when the drama in Libya started. EXCESS speculation. Rick works in the Wall Street environment he's almost obligated to defend these Wall Street traders. Don't believe the hype.

[Estevinyo]

if you're selling your contract before expiration to buy a future contract, the price of the about-to-expire contract would drop because nobody would buy it right before they HAVE TO ACCEPT BARRELS OF OIL. Even though a speculator might sell a contract and buy another one further, they have to sell it before expiration and if they had so much influence on the price, then at the time of delivery you would get the market price because all the speculators would be out of their positions

[SilverRose09]

My sister and brother in law, never worked , they just fraud everybody they saw, client, family and friends. They bougth their houses with no downpayment, refinace and took all money out in loans spend it out . Now they are going to be bail out....by the honest hard working people. that by they way have lost half of their life income with the crisis. it tells me that being a lazy, unhonest and a smart talking lier is the way we have to be in order to get rewarded..

[xdir]

what santelli did not say is how investmant banks rented up oilsuper tankers to store the oil while they speculated on the price. why would people gambling on price fluctuation need to hold the commodity? to rig the game.

[mididoctors]

@xdir they would need to keep doing this cumulatively every month to hold the price up. there isn't enough storage capacity in the world to do this to distort prices by the margins claimed.

[xdir]

@mididoctors Oil is ALWAYS in demand and normally sold by the time an empty tanker reaches the terminus, now the traders move oil to storage depots instead of straight to customers, creating a false dip in supply.

Wiki "Oil-storage trade" one in 12 oil tankers is used for storage by the investment banks.

[mididoctors]

@xdir  no temp dip can effect the expiration price. think about it..if the speculative "hoarded oil" is released back on the market the price goes back down. if hoarding is distorting the price the hoarded oil HAS to be kept off the table..hence cumulative.. each months hoarded oil has to be stored building an every growing lake of oil hidden from the market. 1:12 is not enough as oil production being flat and oil storage is flat (approx).

[xdir]

@mididoctors You better contact Morgan Stanley and tell them that, they are making a killing by hoarding oil.

If 100 barrels are produced every day and 100 barrels consumed then taking out 1 barrel will cause price to rise, as the demand for oil is also increasing the stored oil is leached back into the system at the higher price a few months later, the only way to sto pthis is for the oil producers to increase production to far greater then can be stored, which is impossible as they are at 100%

[mididoctors]

@xdir then the speculator effect would be a fixed sum as the oil is constantly put back into the system months later..since the leeching back effect is a scale shorter in time than the period claimed to be effected the net effect would be zero... if I capture 1 barrel to speculate with every month (say) the net effect is zero because some speculator is leeching one back from a previous month. this rolling hoard idea doesn't add up

[rodmike9]

Oil wasn't the only commodity to explode, then implode. The problem lies with our banks and the printing of money. Printing money distorts prices (i.e. asset and monetary inflation). The growth of the money supply has, throughout history, caused people to alter their time preference for money. When enough people have altered their spending, bubbles form.

Expanding the money supply alters the time preference for goods and services on a micro (individual) and macro (business and govt) scale.

[shadowcaste]

Absolutely. Lehman, Bear Stears, AIG and all those financials bid up the price of oil to cover their losses in mortgage backed derivitives. This was something real they could sell for money as opposed to make good on the counterfeit paper that imploded the financial system. The trouble was there wasn't enough REAL money in the world to support the price at that level. Also a number of the houses that bid up the prices don't exist anymore.

[AboundInGoodness]

Santelli was totally WRONG!!! There was oil speculation going on that drove prices over $140 per barrel!!! It feels good to see how wrong these so-called experts are. These people should not be on TV. It is clear that Santelli had some investment in high oil prices.

[mrcool011]

It was many things, speculation, inflation and a weak dollar.

[0ZK0R]

For every 1 bbl sold for US comsumption there were 27 sold to speculators...until recently.

With just a 5% requirement for margin buying commodities on the nymex, speculators were getting in en masse at the suggestion of Investment Banks/Hedge Fund managers, and when the govt. threatened closer monitoring the about face started.

60 Minutes just did a report that spelled it all out.

maunaowakea777 has it right.

[mididoctors]

where did the 27 barrels go on the delivery date?

if his scenario is correct then on the contracts delivery date 27 barrels are going to be chasing a buyer of one barrel?

[flyinggeng]

If speculators are on both sides of the market and the interest is balanced on both the long and the short, then the market price is good. There's only large price movements if the speculative interests are imbalanced.

The "finding religion period" is when the price of the contract rapidly converges on the spot price as chances of large upsides and downsides fall towards zero.

[schausm]

Santelli's fighting for the confronting of the "religion finding period", the other side is fighting for the "there's a never a last day."

The fact is that the contract is only representative of ACTUAL OIL at some point. The contract is a piece of paper. Santelli is arguing that the contact ONLY has value inasmuch as it's connected to that real OIL. The more it's rolled forward and forward into the future, the more distorted the price gets, until the last day..

[mididoctors]

that is correct in so much as the last day comes round every month... so those contracts that where bought "back in the day" still win or lose on the spot "religion finding moment" price.. if they buy into the future and the price collapses they lose out.. which is what happened...

in essence its a bet on the spot price at the contracts end and thats all there is to it..

[schausm]

i guess the point he's trying to highlight is that yes, it's a bet, and under normal circumstances, (Vegas for instance) the thing that makes a bet risky is that eventually, you have to pay up. Rolling the bet forward indefinitely is creating the distortion he's talking about because the risk is not being priced accurately.

[Jaycephus01]

And as I understand it, there should now be people who have had to pay all those 'rolled-forward' bets, and basically be wiped out, or have an oil-lake in their back yard. Here it is, Feb 2009. This audio is from June 08. Surely we can look back now and say for sure that something was or was not happening?

[mididoctors]

the oil was burnt

[mididoctors]

the guys lost their shirts

[maunaowakea777]

they put 60 BILLION dollars in futures contracts. they took 40 billion out in the last few months and THAT is what caused prices to drop from 147 to 92.00

get real!

[AirelonTrading]

Replying with a video, that agrees with this video. It's not to disagree with the above video - but to confirm it's thesis.

It's to spread the message.

SPECULATORS CANNOT PARTICIPATE IN THE CASH SPOT MARKET - WHICH THE SPECULATORS FOLLOW!

[Nostams]

Speculation has a minimal impact which is what Santelli confirms. Oil is a supply and demand issue. Plain and simple.

[mididoctors]

you still haven't explained how the "cartel" price is maintained artificially if the buyers aren't there.

[jizzmonger]

"you still haven't explained how the "cartel" price is maintained artificially if the buyers aren't there."

See my previous reply. All you are doing is arguing that oil is worth more than what it was being sold for, not that speculators don't affect price.

[mididoctors]

then thats the price.. if the number of buyers willing to support a given price exits thats the price. thats how it works

[jizzmonger]

LOL

So yes, speculators do affect price and yes speculators need to be kicked out of the market.

And kicking them out would bring lower fuel prices.

Thank You!

I knew you would come around.

[mididoctors]

i don't think you understand how this works

[jizzmonger]

You are only saying that because the longer you can confuse and obfuscate the public, the longer you can make money at your shell games.

[mididoctors]

your living in some paranoid universe of your own making .. I do not speculate or invest on the markets.. I'm not even a supporter of how the markets operate. But i do know the price of oil is not some half baked speculation conspiracy theory poorly understood even by those that espouse it. it has no internally consistent logic.

[jizzmonger]

The same people telling us that speculation does not affect the price are same people that crippled our system of credit and said "self-policing" would be adequate when pushing for deregulation of home loans and such.

I mean "why would a Bank give loans to people who aren't going to pay them back" they argue.

Liberalize these rules so we can be more innovative.

One thing is for certain. The world of finance is very boring when it's regulated in a way that keeps it honest.

[mididoctors]

I can assure you that I am not involved in any decision making or use the credit system.. neither am for or against regulation or free markets. what i am for is transparent understanding of what is going on..and speculation as a cause of the trend of increasing oil price is a false argument

[jizzmonger]

So you're also arguing that speculation cannot increase the price of stocks.

[mididoctors]

paper future or even commodity futures could be pushed up by speculation but expiry of contract means the real price is found out... you can speculate and distort oil futures for all its worth but your left without a chair when the music stops on delivery.. delivery is every month. if I have pushed the price up to a girzillion dollars a barrel at expiration I need some end user willing to buy it at that price...

[jizzmonger]

And if 80% of the contracts are held by speculators at that price level, then what?

I look forward to your answer.

[mididoctors]

then at delivery either they find a buyer or take delivery..

100% of the contracts could be held by speculators..

[jizzmonger]

Right and you're a refiner and the only available oil contracts are all held by spculators at 140 bucks a barrel.

What do you do?

[mididoctors]

the scenario you describe requires that there is a speculative cartel fixing the price.. this extreme conspiracy theory (even if true) could only work if there are a number of buyers willing to buy every contract at the cartel price. if a speculator is left holding a contract he either takes the oil or lowers his price and breaks this mythical cartel.

[mididoctors]

think about it from the speculators POV. how can they be sure to sell the oil at the so called artificial price they have created?

[mididoctors]

the dilemma on the clock running out is in the speculators end of the court not the end user

[jizzmonger]

Speculators hold the majority of the contracts.

If I am a refiner I have no choice other than to buy contracts and take delivery at the inflated price.

[mididoctors]

the refinery isn't obligated to buy anything if they think they can't sell at the price they need to given the buy price why buy?

[jizzmonger]

The refinery needs product.

That is what they do, refine oil.

What are they going to do? Wait for all the speculative bids to drop off and lay off all their workers until oil drops to it's unmanipulated market value again?

[jizzmonger]

It is a Cartel when they hold as many contracts as they do.

You are deliberately obfuscating the simple because you know that speculators can drive prices.

Regulators know this and have known this and the fact that prices have risen since deregulation proves this.

Sorry. You guys aren't fooling anybody.

[mididoctors]

how do the speculators agree to not sell if the buyers aren't there? do they swap mobile phone numbers?

[mididoctors]

are they hoarding the oil they can't sell and acting as a supply break?

[mididoctors]

I think your fooling yourself. how is the driven price kept during the non speculative bid phase of the contracts history.

all the sellers have to ask for the artificial price irrespective of the number of buyers.. some speculators must be losing money deliberately to support the others with some sort of altruistic financial suicidal behavior. your argument makes no sense

[jizzmonger]

"I think your fooling yourself. how is the driven price kept during the non speculative bid phase of the contracts history."

Yeah, real difficult to understand isn't it.

You're a refiner. You need 1 million barrels of oil now. Speculators all have bid up all the contracts to 130 bucks a barrel.

You either pay their price or you don't buy oil.

This is why REGULATIONS limit the number of contracts speculators can hold. ICE has no such regulations.

They aren't tricking anyone

[mididoctors]

I only "need" 1 million barrels of oil if I think i can sell the end product of that oil at prices dictated by costs and demand...

if that demand for refined end user product exists at that price thats the price

[jizzmonger]

I can't believe I spent 50 posts arguing with you when all you did was concede exactly what I have been saying from the beginning.

Speculators are the reason fuel has gone up, they are the reason for the volatility and unregulated speculation negatively impacts society and kicking out speculators would bring lower fuel prices.

[mididoctors]

this "because i say so" style of argument is not credible.

what is the price.. explain what the price should be in your universe

[jizzmonger]

Supply/Demand sets the price.

Supply is affected by the amount of capital flowing to the supplier.

With speculators injecting themselves in between the supplier and the consumer then less capital flows to the supplier thus distoring the price.

The Saudis don't want demand to drop because they know America will react and come up with alternatives to oil. Refiners don't make more money when prices are high because margins fall while capital requirements rise.

[mididoctors]

i had to read that twice. but its just nonsense

[amsd1231]

I think more people are short or were short oil when it was 145. Of course it might have been the speculation and it has to see its correction, but ultimately, over a longer period of time, oil will reach 200 because of world supply and demand.

[crock703]

For the sake of fun..

You suspect that deregulation opened the door to create instability in the financial system and break the dollar, driving investors to hide in commodities, a number of big speculators really moved the price initially (and the latecomers followed suit otherwise they'd be selling at a loss), with the end result being that the average consumer suddenly see the value in demanding alternative energy, and it becomes worthwhile for investors?

[AirelonTrading]

You're insane. You don't even understand that speculators CANNOT AFFECT THE CASH MARKET, AND ARE NOT ALLOWED TO PARTICIPATE IN THE DAY TO DAY CASH MARKET - WHICH DETERMINES PRICE.

watch?v=Wgd3Zf8-pOc

Futures speculation on expiration of a contract, as Rick states, follows whatever the underlying is dictating. The underlying is the spot cash market.

[jizzmonger]

I appreciate a lively discussion but it's not a free market because it is only paper contracts being exchanged among speculators, not actual product.

If actual product was changing hands then the market would be "free" and would represent the real world price.

That's was/is the reason for regulation.

[AirelonTrading]

Until it goes to the fact / spot rate and as Rick says: DELIVERY! And even if you roll it over - then there MUST be a commerical interest to pick it up, or short it? Don't you understand how zero sum speculation works? Look at the COT report. You add the positions of the large and small speculators together - it MUST equal the number of commerical interests. It has never - in history - proven otherwise.

[jizzmonger]

Nope. I have seen so many present the argument this way.

You are looking at speculators as merely poker players at a card table where same amount of money stays at the table with the money merely changing hands among players right?

No. Oil is commodity. Demand is relatively inelastic and not much more is pumped than what is needed because it's cheaper to leave it in the ground than it is to pump and store in above ground tanks. CONTD.

[AirelonTrading]

DEMAND IS INELASTIC??!!!!

WHAT???!!!

Okay. No need to go any further than that. We don't need to progress.

I suggest you read even basic economics courses. I'd start with "The Wealth of Nations" if I were you, and progress from there. Demand is inelastic. That now rates, as the most insane thing I have ever heard in my life.

I'll just ask the owner of this video to block you, because you're just filling the comment section with nonsense.

Demand is inelastic. What's next? God.

[jizzmonger]

No really, oil is the backbone of the economy.

I bet you would pay a lot more money for food than you do now. Speculators know that too.

[AirelonTrading]

I AM a speculator.

You're trying to argue with someone who's BUSINESS and money - is how all of this works. Thus, my channel.

Are you going to thank me for recently pressuring the price of Soymeal down? Are you going to thank me for recently pressuring the price of Wheat down?

It goes both ways.

You don't just make money - because the markets go up. You make money when they go down to. There's no incentive for me to screw over society. I go with the fundamentals.

[jizzmonger]

CONTD

Speculators compete with real hedgers for these contracts. They have to pay the price that the contracts are currently selling for.

Your argument simply resorts to something like they weren't charging enough for oil in the first place.

Well of course oil will fetch a very high price, much more than what suppliers were charging and speculators know this.

That is why they created an unregulated exchange in which they could move in and further their own agenda.

[AirelonTrading]

Bezmenov was correct.  Wow.

[jizzmonger]

Your argument is that speculators alone cannot affect pricing which is flagrantly false.

[AirelonTrading]

Not, it's that it is the most fair reflection of price, given the economic fundamentals. I, as a speculator, look to the fundamentals, and then I make my decision.

That's basic economics, which you obviously haven't studied.

[jizzmonger]

Right, which is why stated earlier that you can't win the argument because you first have to argue that we weren't being charged enough for oil in the first place.

I then simply counter with people will pay a lot more for fuel than they do now because it's basic good that powers society just like you would pay a lot more for food than you do now.

If supplies are short, why have I and none of the other citizens of the world had any trouble getting fuel?

[AirelonTrading]

OH MY GOD! ITS BECAUSE SUPPLY AND DEMAND ARE ELASTIC.

I thought people were taught this stuff in grade school.

And, in addition, it's not only demand, it's several factors. A weaker dollar is the other (Strength in the dollar has led to oil dropping like a rock). Flat Supply. Current oil fields needing more water pressure to sustain output. A speculator takes a position after looking at fundamentals.

[jizzmonger]

I said relatively inelastic.

Your argument is that speculators cannot affect the price that the end consumer pays. I am layperson, not a trader. It's obvious, using basic economic principles that speculators have caused a price bubble as they do when they speculate on anything.

Again if you are saying that speculators cannot affect the price of oil contracts, you are also arguing that they cannot affect the price of stocks.

Thanks for the lively discussion thus far.

[mididoctors]

the reason why there is no shortage in the USA is because the price is high... high prices negate shortages

as for the rest of the world your statement is inaccurate

[jizzmonger]

So who's not getting fuel?

What tanks are going empty because of low supplies?

[mididoctors]

the argument rick gives is that speculation can distort the price but only between delivery dates..ie one month.

since oil as been on a exponential trend of 30% per anum since 2000 the speculation can not be the cause

[jizzmonger]

The price increase started in mid 2003, not the year 2000.

As soon as the markets were deregulated, prices went up. The only people blathering that it is supply/demand fundamentals are those benefitting from the deregulation.

Total nonsense.

Oil inventories fluctuates because that is what is logistically required in the drilling/delivery process so that oil being pumped or transported has some place to be offloaded.

If tanks are not getting close to empty, they don't pump more.

[PAZ0619]

Are you talking about the ex-KGB agent, and his comments on demoralization?

[AirelonTrading]

Quite frankly? Yeah.  When I hear anti-speculation talk? That's the first thing that pops into my mind. The people who are arguing with Rick Santelli here? It's like they can't see simple logic.

[soVun]

Youre getting schooled dude. I doubt your smart enough to understand who your even trying to debate this with.

[mididoctors]

people are confused on this point.. amount of money is not static.. massive flows of money into speculative markets is not filling up "the market"in some sort of liner fashion. money is leaving the market as well as entering it...

[jizzmonger]

The bubble is popping so of course people are leaving it.

All it took was an inkling from congress to talk about regulating the ICE and the price started dropping.

Again, if you are arguing that speculators cannot affect the price of a paper contract, then you are arguing that they cannot affect the prices of stocks.

Mr Santelli is saying that because the contract can be sold at the inflated price, that speculation must not exist.

What this means is that the public will pay CONTD

[jizzmonger]

CONTD more for oil than they currently do, just as you would pay a lot more for food than you currently do so this is your supply/demand argument.

So you are basically arguing that the public wasn't paying enough for oil until traders came along and bubbled the price.

[mididoctors]

money is always leaving.. think about it

[jizzmonger]

"money is always leaving.. think about it"

Enlighten me.

[mididoctors]

well first off.. what happens to the money when you sell?

[dtguy123]

Rick is correct about the delivery on the last day of the contract, except the others just dont understand how the trading works.

But I think they do now. You will note there moment of silence when they shut-up and actually thought about it.

[FunnyDigestion]

This guy's voice is hilarious.

[Lallar3n]

"Speculation has been done for 60 years"

There used to be heavy regulations on the commodity markets. Not anymore.

[onlyprophet]

People need to be alerted to our history, and history of other nations that also have suffered from similar things, SPECULATORS SUCK, FUCK THEM... THEY KILLED MILLIONS IN THE 20's, and are KILLING MILLIONS TODAY.... KILL SPECULATORS and the problems will STOP.... MAKE EVERYONE AWARE OF THIS,, dont play games in the chicken shit parts about TRADING.... no sense in counting contracts... KILL ALL PRICE REGULATIONS .. deregulate your alternator and battery goes to hell, may fry your entire system..

[AirelonTrading]

Speculators are the same ones that gave you $30 oil. Speculation has been done for 60 years. They negotiated $30 oil to you. Were you thanking them for $30 oil then in the 90's with the same venehmence that you are decrying them with now?

[jizzmonger]

Who's ass did you pull that out of?

[johnnyoregon]

Next you will go after the short sellers. Everyone tries to go after the traders when times get tough. Thats the last thing we need to do. That is communism, by way of getting rid of free trade. The traders are people looking out for your 401K, IRA and your pension. You clip them you clip yourself or your friends and family. If you watch the stock market you notice that simple words by presidents effect the stock market. The traders are rabbits.

[johnnyoregon]

GW Bush's Executive order on repealing Executive bans on oil exploration lowered oil $9 a barrel. Now the ball is in US Congress's court. If these bums don't follow suit, they will find themselves looking for new jobs.

[onlyprophet]

HEY RICK,,, You dumb ass, read about the depression, OIL SPECULATION CRASHED THE STOCK MARKET ALL BY IT SELF....... Franklin Roosevelt BANNED SPECULATING and that ALONE REOVERED THIS NATION and made it the RICHEST and STRONGEST in the world.....

JUST SPECULATING HERE, If we started a bowling tounament on wall street and cut the heads of OIL SPECULATORS for bowling balls, Gas at the Pumps may drop below $1 per gallon...(we should try it and see, no loss if it don't work)

[AirelonTrading]

Awesome, now I get to report your account for making death threats! Thanks!

[jizzmonger]

He's right though.

Without speculators (people who never plan on taking delivery) society would notice nothing difference except cheaper oil.

[AirelonTrading]

Speculators negotiated $20 oil back in the 90's, and the producers were blaming them for "too cheap" of oil.

If you want communism, death, and untold suffering? Get rid of the speculators. It's been tried before. The results are an unmitigated disaster.

I doubt, seriously - you even know what speculation is. I'll bet you one thousand dollars to donut holes - you think that speculation is only buying something - so you can sell it later at a profit?

[jizzmonger]

There is a difference between producers and consumers hedging and speculation.

Speculators neither produce nor consume. They cause inflows of capital into the market which increases the price. They then might hold a contract at say 80 dollars a barrel which they sell at lets say 120 bucks.

What they have is interrupt the capital supply between the producer and the consumer. I.E. the producer gets less money and the consumer has to pay with the speculator pocketing the difference.

[jizzmonger]

"If you want communism, death, and untold suffering? Get rid of the speculators."

High oil prices cause by speculation cause death and suffering. Affordable oil prices which will be had by kicking out speculators won't.

Any questions?

[AirelonTrading]

You didn't answer my question. You CONVENIENTLY didn't answer my question.

WHAT ... EXACTLY ... IS .... SPECULATION?

[jizzmonger]

One could also make a bet that the price of oil is going to drop and make money that way which I am sure is an effective strategy after a price run-up.

What's your point?

Either way both tactics are done by useless traders who treat the commodities markets like some sort of worldwide speculative casino.

They perform no useful function. Kicking them out will allow the markets to function as designed.

[AirelonTrading]

And during that entire runup, the COT report shows that small speculators were net short (Bet Oil is going to drop). 73,000 contracts of oil, short, putting downward pressure on the markets.

If you eliminate them, you eliminate the downward pressure. Then, it's only the producers of the commodity. And do you trust the producers to find a "fair price"? Do you trust Exxon and the Saudi's?

[crock703]

Hey, layman here, but..

If something like a war or some other tumultuous event causes oil extraction & delivery to be impeded, speculators are pretty safe in betting that supply will decline, right? - then low supply & speculation drive the price up.

If people are hiding in commodities from a weak dollar (expecting it to melt), then they'll keep sitting there until they can measure the global fallout of this 'economic crisis' & move their assets into the safe survivors.

lame, I bet. comments?

[AirelonTrading]

It's called: LIQUID PRICE ARBITRATION. It's a concept as old as the hills. People have been making a FORTUNE in the recent drop on oil. Have you thanked a speculator? Or ... would you rather than Exxon and the Saudi's just agree on a price?

LIQUID: It provides liquidity for the Exxon's and the BP's to arrive at a price. And the report shows that people have been putting their money on the line, trying to pressure it down.

[jizzmonger]

Ariel, it doesn't provide "liquidity" because money does not change hands until the contract settlement date not to mention they only have to put up 5% of the total contract price in order to bid.

The only "liquidity" it provides is causing the price to rise and thus causing the consumer to get charged more.

If speculators do not affect price, then allowing U.S. regulators to monitor ICE should be of no consequence to traders yet they fight it tooth and nail.

Discuss

[AirelonTrading]

"The only "liquidity" it provides is causing the price to rise and thus causing the consumer to get charged more."

That's where you're getting it wrong, because you don't understand how the markets work.

That SHOULD READ:

"The only "liquidity" it provides is causing the price to rise or fall - dependent on order volume - and thus causing the consumer to get charged more or less; thus making price more easily agreed upon by the producers and consumers"

[jizzmonger]

It's a commodity.

Traders hold a large number of contracts and thus set the price to the consumer which in this case would be a refinery.

Speculators have caused the price to rise. It's that simple. You can't deny this. They will continue to cause massive price volatility because that is what is required for them to be able to make money at speculating.

[AirelonTrading]

Yes, I can deny this. NOT ONCE have you brought up the subsadies of foreign governments. Not ONCE have you talked about the demand rate since China came onboard and started buying from the same markets as everyone else (mid 90's). Not ONCE have you talked about supply problems - wherein the supply has increased by a measley 600 barrels, and demand has shot through the roof.

You just want a scapegoat. As do most socialists and communists.

[AirelonTrading]

(make that 600k barrels)

[jizzmonger]

Supply problems?

When was the last time you went to gas up and the station had no gas?

If a tankfarm is empty because a full tanker ship is en-route and needs empty tanks to offload it's product into, speculators say "see!! Supplies are low".

[AirelonTrading]

Or what about ... Gee, I don't know, ... NIGERIA JUST STOPPING for god knows how long?  Libya promising that whatever Saudia Arabia increases in production, they will decrease by the same amount? Supply is flat, to slightly up. Demand is through the ROOF. Otherwise, the shippers would not have record profits. The shippers only make money - when people want Oil shipped to them, from the producers.

[crock703]

At the end of the line - the gas pump - the gas station owner sets the price THAT day. So regardless of what contract ends up being ultimately, when CNBC screams "$120 a barrel!", the manager goes outside and changes the sign, and people say "damn, it was $3.50 today!" "wow, really? I did hear that oil hit some new high at $120 a barrel or whatever, guess that's why."

Am I wrong?

[AirelonTrading]

watch?v=BW77hsogduE - economics of liquid price arbitration (free markets at work)

watch?v=ANvoFN19YyM - the supply / demand situation with people SHORTING oil

watch?v=JO6dhGhLh6Y&watch_resp­onse - EXTREMELY IMPORTANT - shorting oil and absolute data showing speculators net short oil, pressuring the market down during this rise

Unless - you are against free markets. Get rid of the crappy Commodity Index ETF's that are SCREWING UP speculation

[crock703]

The drop in oil prices that happened recently - maybe around when AIG fell, or the bailout talk started - wasn't short selling banned then? Was that the cause of the drop in price?

[AirelonTrading]

As a matter of fact, as close as you got to the definition? Was exactly what I had intoned.

"I'll bet you one thousand dollars to donut holes - you think that speculation is only buying something - so you can sell it later at a profit?"

[jizzmonger]

Well if you wanted me to provide a "textbook" definition then I would say it's this:

Speculation can be defined as betting for or against that something is going to change in price.

Ariel, ever since oil trading moved off a regulated exchange, the price has gone up. You can trace it to the exact day in 2003 and it directly correlates with the number of contracts that speculators hold.

[AirelonTrading]

It IS regulated, at the NYMEX.

The problem, is that by raising the margin requirements, what occured is exactly what the leftists were warned would happen.

The traders just moved to an unregulated arena. They'll do it over the counter, the more you try to control them. Just like all socialist programs. The more you try to regulate, the more 'black market' the process becomes. Free markets WILL find a way.

[jizzmonger]

Yes, it was regulated since the 40's. Deregulation brought us unaffordable prices in Food and Oil.

What's your point?

ICE is not regulated. If these guys want to do business with America then you make them trade on a regulated exchange. There is nothing wrong with the country protecting it's citizens.

[AirelonTrading]

What!

.77 a gallon gasoline was "unaffordable"? I paid more for a bottle of water, '90 than I did for Gasoline.

Prices, that were negotiated - by speculators.

So - THAT is your example of "unaffordable"?

It reflects the fundamentals. Look at the demand rates as shown by the shippers of Oil to developing countries. Their profits have gone through the roof because those countries subsadise(sp) oil, and the citizens dont pay the brunt of high oil - and demand increases.

[jizzmonger]

Gas prices were not negotiated by speculators.

Where are you coming up with this stuff?

Look at the percentage of contracts held by speculators before the creation of the unregulated ICE VS After.

Oil prices have not done anything except go up.

You can track it to the exact month.

You can't win this argument because you would also be arguing that speculators can't affect the price of a stock.

Or will you argue that too?

[AirelonTrading]

Ohhkayy dude? Gas prices not negotiated by speculators? Where are you getting this stuff from? You're embarressing yourself. Unleaded Gasoline futures, IS speculated on - at the NYMEX - through ICE. I know - I speculate with it. Right now - RBU8 settled on Friday - September Contract, at $2.88. So you want to try that again?

Speculation has gone on forever, on just about every commodity you buy. Wheat, Sugar, Rice, Oil, Coffee, Cocoa, you name it. Lord, there are NUMEROUS Gasoline markets

[jizzmonger]

Right but speculatory bids were regulated in such a way that they could not affect the delivered price of the product.

In that case speculation is ok.

[AirelonTrading]

Oh

My

God.

I'm going to let you read your own statement, and give you a chance to correct that one, before I completely blast it to smithereens. I can't even believe that's being suggested.

WOW

[GabbyShae]

U are 100% wrong. They ALL go to delivery price. Thats how the process works.

1. speculate price arbitration

2. price

3. spot rate

4. price

5. delivery

you obviously dont understand any of this & have enuf info to b dangerous

as do unleaded gas futures

[AirelonTrading]

And for all the increase in speculation - there MUST be an increase in shorts or longs by the commerical interests. It has to - because it's zero sum. There CANNOT be a purchase or a sale, without a corresponding commerical interest. It CANNOT happen.

You don't even understand these markets, and you're trying to talk about 'excesses'? Forget it, I'm seriously beginning to believe that you are intentioanlly spouting off false information - just to try to further some socialist agenda.

[AirelonTrading]

ICE is not regulated? WHERE IN THE NAME OF GOD did you get that bit of completely false information? "Wikipedia"?

Good lord, it's insane the regulations you have to deal with when commodity futures. What you can, and cannot say. What you can, and cannot trade. Margin requirements. Fees.

Where are you pulling this stuff from? Because it's 100000% in opposition to the facts.

[jizzmonger]

It's regulated in London which does not regulated the exchange in the best interest of the United States.

Get it?

[gscash]

Peak Oil is a load of bullshit. You believe that bullshit? There's plenty of oil in the world. Demand is going down with the higher prices everyday.

Oil specualtors are manipulating the market. The commodities futures market was never intended to be abused this way until loopholes were created in 2000 to unregulate the market.

The reason these banks and investors are investing oil is because they have nowhere to put the weak ass american dollar.

It's a money problem not an oil problem

[mycatisromeo]

This is the fact. Oil speculation is one of the RESULTS of (drum roll please)

PEAK OIL.

They just don't have the balls to say it. They're trying to keep the lid on as long as they can - once it comes out, the public probably still won't believe it, until they pull their heads out of their asses and do some research. They only believe what they hear on the media.

[alotsum]

you hit the nail on the head. PEOPLE NEED TO DO RESEARCH. not gonna happen though.

[AirelonTrading]

Of course in the interim there's some distortion. Haven't these idiots that Rick is trying to explain this to ever heard of liquid fair price ARBITRATION ! ! !

DUH!

Has the entire world gone communist or something?

[AirelonTrading]

Rick Santelli is the smartest man at CNBC. Bar none.

[AirelonTrading]

5*'s and favorited.

If I hear one more person BLAME speculation? I'm absolutely going to flip my lid, and start beating them over the head with a copy of "The Wealth of Nations".

I agree with Rick that the ETF's are screwing crap up. But the fact is that speculation = liquid price arbitration for the last trading day.

[AirelonTrading]

A-FREAKING-MEN RICK SANTELLI!

[cipi604]

die-off doesn't mean game over, some of us will prevail

[2bsirius]

Scary....I especially dislike the phrase, "Game over." Teapot Dome comes to mind. Again, scary!

[MrObama]

Peak Oil = Game Over