60% Of Oil Price Down To Speculation

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html

So, these luverly hedge-funds, banks, etc., are still speculating like there's no tomorrow - in oil as well as life and death (food).

Gets me wondering whether peak oil is just a concept thought up by the speculators.

And why da hell is Gordon Brown and Co going on about supply and demand?

(1) Speculation appears to the main problem and

(2) Surely refining capacity is the main issue - not production.

What's the agenda?

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I understand around 35,000 people die every day from starvation and hunger-related diseases - and thanks to biofuels and the spivmeisters, looks like it's gonna get a whole lot worse.

G

http://www.guardian.co.uk/environment/2008...eed=environment

Speculation fuels food price rises

the past decade we have seen asset bubbles burst in the dotcom industry, developing country stock markets (the latest is China) and now a colossal housing bubble in the US and Europe (Credit crunch, April 10). The victims have largely been the middle and working classes of the wealthier west. But the new victims of the unregulated flows of international capital will be the poorest households on earth. Amartya Sen taught us that reduced purchasing power rather than a lack of food availability causes hunger and malnutrition. The recent terrifying increases in food prices (Report, April 9) means the poorest households in the developing world, surviving on tiny fixed incomes, will be hungry right now. In a few months our TV screens will show the pot-bellies of children with kwashiorkor and the emaciated faces of mothers and children ravaged by malnutrition and infection. Many will die unnoticed. Food price rises cannot simply be explained by crop yields or the expansion of the use of agricultural land for biofuels. Speculation in agricultural commodity markets runs in parallel with the rising costs of gold, oil and essential metals.

Gordon Brown is right to call for concerted action by the G8. Food commodities should be insulated from speculators and hedge funds who profit as prices rise, and again when they fall in a few months time. Anyone profiting from this volatility will do so at the expense of the lives of thousands of mothers and children.

Anthony Costello

Director, UCL Institute for Global Health

Edited May 23, 2008 by gruffydd

[BoomBoom]

Wishful thinking. Peak oil is very, just most people are too thick to grasp the concept. The issue is not the amount of oil left, rather the rate at which it can be extracted and refined. we can't build the capcity to extract anf refine oil quickly enough to keep up with the growth in demand. Oil is only going to go up in price, should be $200 a barrel by end of 2008, moving towards $250 by mind 2009.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

http://www.arabnews.com/?page=7&sectio...m=11&y=2007

[The Masked Tulip]

Their greed means they can't stop themselves. They just keeping on from one thing to another just in order to sell their Souls. Sadly, what they are now ramping is resulting in people dying.

Unbridled Capitalism is evil.

[Pindar]

If they don't get you with high house prices, they will get you with high energy prices or high <insert name of essential here>. The sooner more people wake up to what's going on and start to demand the right to provide their own power generation, the better. Solar concentrators in the desert, PV cells on our roofs, solar water panels - anything - except being completely and utterly dependent on scumbags for our energy and at the mercy of greedy speculators. Oil prices are just another stealth tax on the productive.

Edited May 23, 2008 by BarrelShifter

[the_austrian]

Their greed means they can't stop themselves. They just keeping on from one thing to another just in order to sell their Souls. Sadly, what they are nowramping is resulting in people dying.

Unbridled Capitalism is evil.

The problem isn't capitalism it's central banks. We don't live in a capitalist world but if we did we would have no legal tender laws so speculation driven by credit would be impossible.

[the end is a bit nigher]

Wishful thinking. Peak oil is very, just most people are too thick to grasp the concept. The issue is not the amount of oil left, rather the rate at which it can be extracted and refined. we can't build the capcity to extract anf refine oil quickly enough to keep up with the growth in demand. Oil is only going to go up in price, should be $200 a barrel by end of 2008, moving towards $250 by mind 2009.

yes, there is a case for peak oil, and we will run out sooner or later - however, the title of this thread is pretty much correct - 8x the amount of oil delivered is traded every day, mostly in derivatives - if the majority of these think the price is going up and buy, well you know what happens

this has the same effect as the btl boom had on house prices - if you have 1m purchases of houses that wouldn't have been there otherwise i.e. for second, third, fourth properties etc, then the price goes up

[jonpo]

Is it just me who wants to go short some crude oil at these levels ?? seriously at these prices people will be cutting back all over the world !!! and oil companies are already going on a huge boom in production. considering the histeria I'm thinking of selling anythink that looks like a break....

[A.steve]

Is it just me who wants to go short some crude oil at these levels ?? seriously at these prices people will be cutting back all over the world !!! and oil companies are already going on a huge boom in production. considering the histeria I'm thinking of selling anythink that looks like a break....

Jonpo, it isn't. Unfortunately, while I've found ways to go long, I can't find an easy way for plebs to go short (unless they bought a while ago, and sell their holding, that is.)

That, in itself, should be a clear indication that we've a bubble... if only 'insiders' have the option to go short.

[jonpo]

Jonpo, it isn't. Unfortunately, while I've found ways to go long, I can't find an easy way for plebs to go short (unless they bought a while ago, and sell their holding, that is.)

That, in itself, should be a clear indication that we've a bubble... if only 'insiders' have the option to go short.

going short is easy....

igindex

capital spreads

cityindex

they all have both NYMEX and ICE crude

its the small matter of WHEN you can go short and stay short untill were back to 50 bucks a gallon I'm guessing we havn't seen the peak yet from the looks of the chart... but it could still go a lot higher before it crashes...

[Ash4781]

http://uk.reuters.com/article/marketsNewsU...323177120080523

LONDON, May 23 (Reuters) - Britain's leading stock index slid 1.5 percent on Friday to end its worst week since early February as miners and oil shares weighed, though Cable & Wireless (CW.L: Quote, Profile, Research) rose on upbeat broker views.

I'm confused as the article quotes a high oil price is good for oil companies but the oil stocks have languished.

Is this due to falling demand further out due to global economy slowing sharply ?

'the fundamentals'

Edited May 23, 2008 by Ash4781

[?...!]

How about the notion that once the oil price reaches a certain level the effects are deflationary, because it is not worth doing anything?

Result? Output falls.

[sikejsudjek]

Reading through Eric's book he recommended 'The First World Debt Crisis' its sad that all this has happened before in 1929. After WWII Governments were determined to tame finance to prevent the bubbles and collapses that had indirectly lead to the war. They more or less managed it until the US defaulted on Bretton Woods.

We have learnt nothing. Deregulation and Globalisation will enslave the lucky and kill the unfortunate. How long does it take for people to wake up and realise that its trickle up economics at work and not trickle down !

[tegan]

Its a great economic mystery why when housing prices were becoming grossly overpriced by speculation and inflation everyone thought this was ******ing peachy - endless tv programmes where made solely to further ramp up prices, the politicians did everything they could to further jack up prices, and million jumped on the bandwagon directly causing millions more to suffer the consequences. Yet now the exact same thing is happening to oil prices everyone is crying foul? Why are prices endlessly rising on one of lives essentials - housing a good thing yet on another - fuel its bad?

Another mystery is why, when oil prices double with the space of a couple of years effectively imposing the carbon tax so many are asking for and presumably saving us all from global Armageddon, do people complain? If all what we are constantly told about global warming is true its saving their lives surely? Ungrateful buggers eh!

[jonpo]

How about the notion that once the oil price reaches a certain level the effects are deflationary, because it is not worth doing anything?

Result? Output falls.

I agree.

some people may have to travel a long way to work by car for quite small wages. how much would oil have to rise by before they are better off just to stay at home and claim benefit.

equally the cost of transporting certain goods may rise to a point where there is no demand for them....

the effects are clearly already hitting travel... silver jet was suspended today.... and for good reason.... there is falling demand for pointless air travel... it takes a lot of energy to move people around the world. the effects of say 200$ oil are going to be less flights less car journeys, shifts towards shorter supply chains and a trend 'back to basics'

[FreeTrader]

I agree.

the effects are clearly already hitting travel... silver jet was suspended today.... and for good reason.... there is falling demand for pointless air travel... it takes a lot of energy to move people around the world. the effects of say 200$ oil are going to be less flights less car journeys, shifts towards shorter supply chains and a trend 'back to basics'

Worth watching cruise lines too. Royal Caribbean has been building those massive ships over the past few years, and you wonder how much of this extra capacity has been in response to 'false' demand from inflated housing wealth. RCL's shares hit a new 52-week low today as they were downgraded by Morgan Stanley, citing "rising oil prices, weakening revenue yields and the difficult economic environment" according to Reuters.

The cruise companies are imposing fuel surcharges to compensate, and as you point out the airlines are suffering too. The three biggest US carriers raised prices by up to $60 roundtrip today to offset rising fuel costs.

[VedantaTrader]

http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html

So, these luverly hedge-funds, banks, etc., are still speculating like there's no tomorrow - in oil as well as life and death (food).

Gets me wondering whether peak oil is just a concept thought up by the speculators.

And why da hell is Gordon Brown and Co going on about supply and demand?

(1) Speculation appears to the main problem and

(2) Surely refining capacity is the main issue - not production.

What's the agenda?

Guys, please do not believe this nonsense about speculators, and nasty oil companies. This absolute rubbish. I estimate that speculation is about 3 percent of the price. Speculators are a great scape goat. This is government speak that the media lap up. 96 billion dollars of new money coming into the futures oil market cannot double oil prices...in a market that is worth over 3 trillion USD a year...I wrote this yesterday, and I will post it again...

"Speculators are always a nice scape goat to hide the practises of the government. Remember speculators, futures traders make money in up or down markets. Why are they not speculating for OIL to go down? There is a reason they are speculating on the upside, because the fundamentals and the supply and demand coupled with the inflationary practises of the US government are point towards higher oil prices. The other point is that if this was due to speculation then, the stockpiles of oil would be increasing, however, the supply has been constant. The large majority of futures contracts are being delivered.

However, the most glaring fact, that explains the price of oil, and it is the most glaring fact that the FED do not want the joe public to notice. It is so much the devaluation of the USD, that is contributing to the higher oil prices. Oil was 15 USD in 2002. It was in 2002 when the USD started its major decline against all assets and currencies in the world. It is hard to believe that OIL has went from 15 USD 6 years ago to 130 USD.

The FED were not talking about speculators pushing OIL from 15 to 30 to 45 USD because of spculators. The housing market was in a boom at this time. Its only now the bubble has burst that they need to blame these problems on speculators. The FED are bailing out all their friends on Wall Street, sending out checks in the post, and debasing the currency to do this. They are socialising the losses through inflation over all the world. Now the they can't hide these practises so they blame it on every external factor bar themselves.

Look at the big picture, look at the correlations, the evidence...

Between 2002 and 2004 the FEDS fund rate was kept below 2% and was kept at 1% for 18 months. 2 years into the recovery and interest rates were kept low.

In this same period the USD declined by huge amounts against all major currencies. The euro has alomost doubled against the USD, the USD has halfed against the CAD, Gold is up 200% in this time, and OIL has went from a low of 16 USD in 2002 to 50-60USD in 2004/05. The connection and correlation between interest rates being kept low, a declining USD, and rising commodities, OIL prices and a housing bubble is tangible

In 2005 the US started their tightening phase. Interest rates were taken to 5%, and low and behold the USD increased in value for 18 months. Oil prices stablised, and Gold went down in value. Why at this time were the speculators not blamed for driving down the price of oil and Gold?

Again in 2007 until now the FED has cut rates at a massive rate. So in the time the FED have been cutting rates and pumping the world full of excess dollar liquidity, OIL, GOLD, COmmodities have went through the roof...

IN THE PERIOD THAT INTEREST RATES HAVE BEEN CUT IN HALF, OIL PRICES HAVE WENT FROM 60 USD TO 135 USD YESTERDAY...COMMODITIES IN THE SAME TIME HAVE WENT THROUH THE ROOF...AND THE MOST TELLING FACTOR IS THAT THE USD HAS BEEN FALLING THROUGHT THE FLOOR...

Anther point to note, is that the USA have been running a trade deficit at 60 Billion USD a month since 2002. Another cause of rampant inflation.

90% of this commodity boom and oil price rises is a dollar story, short and simple.

Remember commodities declined in value for 20 years until 1999. Futures and speculators were involved in the market then. Were they blamed or rewarded for keeping prices low? Of course they were not, as the price has nothing to do with speculators, or only a very small part. It is the forces of supply and demand coupled with excessive supply of USD.

Citigroup released some info this year that there has been 96Billion USD of new money in oil futures in the last year. Do you really beleive that 96 Billion USD has put the price of oil up by 55 USD in 6 months. Seriously...? Who are the FED trying to kid? Yes, 96 Billion USD will have a big effect on a market that is worth over 3 Trillion USD a year.

Chinas demand alone has increased by 600% in 10 years for OIL. This is a factor, yes, but speculators, absolute rubbish!

The FED have been trying to suppress the GOLD market and are barely able to do it. There is some evidence that CentralBanks have been getting involved. Now if the FED cannot control the Gold market in the long run, how on earth could speculators increase the price of oil by 150%, in a market where 100's of millions of cars need petrol, 100's of millions of houses need energy, industry and transport and airlines spend 10's of billions in months in it. How can this be controlled.

The FED stopped measuring M3 for a reason. They are telling us it is speculators and supply and demand story. It really really is not that...I think people will start to wake up to this.

and this in response to another poster....

"QUOTE (lepa1972 @ May 23 2008, 05:59 PM)

I disagree. Yes, the fall in the value of the dollar has something to do with the rise in the dollar price of oil. I cannot find a day in 2002 when the price of oil hit as low as $15 - the lowest I get is $18 on 18 Jan 2002, but that is irrelevant. Since then, the dollar price of oil has risen to $130, an increase of around 620%. The value of the dollar, according to the Fed's trade-weighted index, has fallen around 26%, so the price of oil, adjusted for the fall in the dollar, has risen around 432% by my reckoning.

If you want to use gold as a yardstick, then the price of a barrel of oil in terms of gold has risen by just 120% over that period. But who's to say gold itself is not overvalued? I still reckon oil is overvalued.

[Edited for a typo: Changing £ to $].

Ah ha, I see your point. However, the reasoning is slightly flawed. The trade weigthed index is a measurement of the USD against other currencies and main trading partners. I did not say that other central banks are not printing money. The BOE, The European Central Bank, they are all quite good at money printing. ALl fiat currencies are being printed. THe EU have been pumping billions of Euros into the credit markets. However, not to the extent that the FED have been...

That is why the USD has not lost as much of its store of value against other currencies as it has against commodities,gold and oil etc. You see Euros and Sterling have been inflated in supply relative to the supply of gold and oil also. It has not only been the USD. And these currencies are measured in the trade index.

You see the supply of gold and oil cannot be increased meaningfully in a year. You can only mine so much gold in a year from the ground. The same with oil. However, fiat money suuply ,like the dollar, the Euro and the Sterling can be printed ad infinitum. The over whelming evidence IMHO is this is mostly a dollar, and over all debasement of most currencies which is causing the price rise in oil. Remember the price rise is a sympton not the cause. Price rise is the result of over supply of(inflation of) money relative to the supply of the goods and services.

If the dollar was on a gold standard today, oil would have not have been any higher than 3 years ago. You state that gold is over valued. However, again you are looking at the sympton rather than the cause. The price rise is gold is a symptom of the relative purchasing power of the USD. So it is not over valued as such. During the last great Inflation between 1969-1982 Gold went from 35 USD to 800 USD. So the value of gold then went up 22 times its price in 1969.

In this inflation gold has went up 3.5 times its price since 1999. If the FED and the US Gov follow on with their intervention, and inflationary practises, there is no ceiling price in gold. Gold can go this time to 5000 USD to 10,000USD. I m sure people will laugh at me for saying that...

The other point is that the FED have taking all these worthless assets, MBS, RMBS, Student loans, car loans on to their balance sheet. Those billions and even trillions of dollars of loses and debt still exist. The FED have enabled the banks to pretend they dont have them, however, it looks like the FED will try to print away these loses, they seem hell bent in doing it. Its very very hard in the medium and longterm to be positive about the dollar.

[VedantaTrader]

http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html

So, these luverly hedge-funds, banks, etc., are still speculating like there's no tomorrow - in oil as well as life and death (food).

Gets me wondering whether peak oil is just a concept thought up by the speculators.

And why da hell is Gordon Brown and Co going on about supply and demand?

(1) Speculation appears to the main problem and

(2) Surely refining capacity is the main issue - not production.

What's the agenda?

How can peak oil be a concept...? I m not being picky to original poster or anything...Oil is a finite source. That is a fact. SO if the world keeps using oil, then logic follows that there has to be a peak. Lets say we discovered that we could measure all the oil in the world, and we converted it into units, and we gave the number that there were 1000 units of oil left in the world...so 500 would be the peak. Well, there is not an infinite supply of oil...so this is not a fallacy.

Another fact. Peak oil is already a reality for the UK as of 2007. It is a fact that more sterling is leaving the UK to buy oil than before. The UK is now net importer of oil. This is a structural change in the UK energy market. This will not be reversed. Peak oil for the UK is a reality.

[Ash4781]

Also BAA have a monopoly on the airports. Not sure whether they will break it up.

I was shocked to learn Easyjet is a loss making business in the winter months. Not too sure they budget airlines can cope with stagflation.

WINTER losses at EasyJet have trebled, the no-frills airline divulged yesterday, as the rocketing price of oil sent its fuel bill soaring more than 40 per cent, or £67 million.

EasyJet, which put out a profit warning two months ago, sank £57.5m into the red for the six months to the end of March

http://business.scotsman.com/budgetairline...rm39.4061233.jp

[SMAC67]

It won't just be Easyjet feeling the pain, check out Willie Walsh's comments in the Telegraph.

http://www.telegraph.co.uk/money/main.jhtm...23/cnoil123.xml

[zceb90]

How can peak oil be a concept...? I m not being picky to original poster or anything...Oil is a finite source. That is a fact. SO if the world keeps using oil, then logic follows that there has to be a peak. Lets say we discovered that we could measure all the oil in the world, and we converted it into units, and we gave the number that there were 1000 units of oil left in the world...so 500 would be the peak. Well, there is not an infinite supply of oil...so this is not a fallacy.

Another fact. Peak oil is already a reality for the UK as of 2007. It is a fact that more sterling is leaving the UK to buy oil than before. The UK is now net importer of oil. This is a structural change in the UK energy market. This will not be reversed. Peak oil for the UK is a reality.

To me it's relatively simple - one cannot extract oil which has not been discovered! A few quick stats:

US Lower 48 - Discovery Peak 1930; Production Peak 1971

UK North Sea - Discovery Peak 1973; Production Peak 1999

World - Discovery Peak 1964; Production Peak ? (increasing opinion is that we are peaking now)

[Guest mSparks]

You should all probably read:

http://www.dubaimerc.com/rss/dmenews.xml

http://www.dubaimerc.com/historical.aspx

Iran asks for yen oil payments

Dubai prices oil on DME

and the direct effect on housing:

http://www.ameinfo.com/157182.html

This is nothing the US is doing directly, it is a response to their behaviour by their suppliers, its not 'speculation' its oil being diverted away from markets we see our price listed at (you can currently buy sept 08 oil on the DME for $75, as long as you dont pay in dollars, and its not going anywhere near the US.

[beefheart]

To me it's relatively simple - one cannot extract oil which has not been discovered! A few quick stats:

US Lower 48 - Discovery Peak 1930; Production Peak 1971

UK North Sea - Discovery Peak 1973; Production Peak 1999

World - Discovery Peak 1964; Production Peak ? (increasing opinion is that we are peaking now)

source?

you peak oilers love spouting absolute noncence.

everytime i post multiple links to sources that flatten peak oil theory

(mainstream news + scientific ...not *conspiracy* sites)

you all disapear and the thread ends.

We had peak oil predicted for 2000 in 1990.

then it was 2010 in 2000.

the goalposts always shift along with some bu11sh1t excuse.

Dr Bubb loves it. he sells financial products based upon peak oil.

I think you are all cretins..

[Guest mSparks]

source?

you peak oilers love spouting absolute noncence.

everytime i post multiple links to sources that flatten peak oil theory

(mainstream news + scientific ...not *conspiracy* sites)

you all disapear and the thread ends.

We had peak oil predicted for 2000 in 1990.

then it was 2010 in 2000.

the goalposts always shift along with some bu11sh1t excuse.

Dr Bubb loves it. he sells financial products based upon peak oil.

I think you are all cretins..

HHHAAA HHAA AHAHHAAA,

if only things were that simple, J6P might stand a chance.

EDIT:Btw, zceb90 numbers sound like the official International Energy Agency figures, Or maybee the North sea licensing authority, but I think they get their numbers from the IEA

EDIT #2: an Ice age was predicted by 2000 in 1970 (the BBC has an entire series on it), but I bet your one of those global warming nuts, given your love of mainstream media.

Edited May 23, 2008 by mSparks