CFTC Report Blames Speculators For Oil Price Swings: Report

[elleng]

Source: NYT/Reuters

The U.S. Commodity Futures Trading Commission (CFTC) is planning to issue a report next month that suggests that wild swings in oil prices were significantly driven by speculators, the Wall Street Journal reported on its website on Tuesday.

A 2008 report by the main U.S. futures-market regulator that attributed oil-price swings primarily on supply and demand was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, told the paper in an interview on Monday.



Read more: http://www.nytimes.com/reuters/2009/07/28/business/business-us-cftc-oil.html?_r=1

[zalinda]

1. Duh, ya think? n/t

[elleng]

3. I think its a good idea to get this word out,

as so many talk about price hikes, 'wondering' about them. Like the RECENT ones.

[Historic NY]

2. Whats so funny is in my paper on one page the AP article is...

gas prices drop 7 cents further back in the paper the story is rising gas prices. Just who the
F--K are they trying to kid. Somebody seriously need to go after these asshats because the government obviously isn't doing one thing.

http://www.latimes.com/business/la-fi-gas28-2009jul28,0,4244666.story

http://www.wqow.com/Global/story.asp?S=10796037

WE are being scammed big time.

[elleng]

4. The papers should be explaining the way these things work,

not merely reporting events such as you describe.

For example, the Houston Chronicle seems to be doing a decent job:

'Producers and big users of oil and gas are nervously watching as federal regulators begin examining ways to crack down on speculation in commodity markets.

The study by the Commodity Futures Trading Commission begins with hearings Tuesday and could result in new limits on the number of futures contracts that investors can hold in oil and other energy commodities.

It also could pave the way for stepped-up regulation of privately negotiated derivative contracts that energy producers say are essential in hedging against price drops.

Lawmakers and the Obama administration are drafting plans to regulate the shadowy over-the-counter derivatives market even as the CFTC considers position limits on energy futures contracts and doing away with exemptions for some traders.

CFTC Chairman Gary Gensler said his panel was prepared to use “every authority we have … to ensure the fair, open and efficient functioning of futures markets,” and could formally propose position limits by fall.'

http://www.chron.com/disp/story.mpl/business/energy/6550080.html

[bluesbassman]

5. Say it ain't so! And here all this time I thought it was peak oil...

:sarcasm:

[pjt7]

6. no shit?

=

[metapunditedgy]

7. So did the oil execs purjure themselves when they testified

to Congress that the prices were just supply and demand?

[elleng]

8. No, its not so simple.

They are not likely to be the speculators, as I understand it.

Producers and big users of oil and gas are nervously watching as federal regulators begin examining ways to crack down on speculation in commodity markets.

The study by the Commodity Futures Trading Commission begins with hearings Tuesday and could result in new limits on the number of futures contracts that investors can hold in oil and other energy commodities.

It also could pave the way for stepped-up regulation of privately negotiated derivative contracts that energy producers say are essential in hedging against price drops.

Lawmakers and the Obama administration are drafting plans to regulate the shadowy over-the-counter derivatives market even as the CFTC considers position limits on energy futures contracts and doing away with exemptions for some traders.

CFTC Chairman Gary Gensler said his panel was prepared to use “every authority we have … to ensure the fair, open and efficient functioning of futures markets,” and could formally propose position limits by fall.

The CFTC already caps the number of futures contracts that investors can hold on most agricultural products, such as wheat and corn, but it has not imposed position limits on crude oil, natural gas and other energy commodities.

$147 a barrel
The proposals come against a backdrop of congressional criticism of speculation in the futures market that some lawmakers say helped propel crude oil prices to $147 a barrel last year.

They are concerned about the surge in activity from index traders and other non-commercial investors who are buying and selling futures contracts with the hopes of profiting from price changes — not in actually taking delivery of the oil or gas at stake.

By contrast, commercial traders typically use futures contracts to hedge against price changes and manage cash flow. For instance, refiners worried about skyrocketing oil costs can enter contracts agreeing to buy a set amount of crude at a specified price months or years in the future as a guarantee against price spikes. Oil producers can enter futures contracts as a guarantee in case oil tumbles on the spot market.

http://www.chron.com/disp/story.mpl/business/energy/6550080.html

ALSO

Regulators reach overseas in energy speculation fight.

http://www.miamiherald.com/business/nation/story/1159944.html

and

http://online.wsj.com/article/SB124874574251485689.html

[Steerpike]

9. Wow

What a big surprise. I thought it was just the free market charging as much as they can get away with.

Really "people" have been positing this for at least a year now.

[elleng]

10. And finally the important agency is going to do its job.

[Joanne98]

11. Regulator report blames speculators for oil price swings

Source: Reuters

The U.S. Commodity Futures Trading Commission (CFTC) is planning to issue a report next month that suggests that wild swings in oil prices were significantly driven by speculators, the Wall Street Journal reported on its website on Tuesday.
A 2008 report by the main U.S. futures-market regulator that attributed oil-price swings primarily on supply and demand was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, told the paper in an interview on Monday.

The CFTC did not reveal preliminary figures from the report to the paper and declined to discuss the previous data.

Reuters attempts to contact the agency outside regular U.S. business hours were unsuccessful.

The CFTC will hold the first of three hearings on Tuesday to consider whether to limit holdings of energy and agricultural contracts and whether some traders should be allowed to exceed so-called position limits.


Read more: http://www.reuters.com/article/newsOne/idUSTRE56R0KE20090728

[HopeHoops]

12. It took a commission this long to tell us what we already knew?

I wonder how much THAT cost!

[TankLV]

36. umm - elections DO have consequences!!!

[Autumn]

13. Well fucking DUH

what the hell is wrong with these idiots.:wtf:

[sinkingfeeling]

14. I do believe DU arrived at this conclusion a year or so ago.

[TankLV]

37. try - OVER EIGHT years ago...

We could see it comming BEFORE the 2000 Coup...

[kpete]

15. Traders Blamed for Oil Spike-CFTC Will Pin '08 Price Surge on Speculators

Source: Wall Street Journal

* JULY 28, 2009
Traders Blamed for Oil Spike
CFTC Will Pin '08 Price Surge on Speculators, in a Reversal From Bush Findings
BY IANTHE JEANNE DUGAN AND ALISTAIR MACDONALD

The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC's new review, due to be released in August, adds fuel to a growing debate over financial investors who bet ...

Read more: http://online.wsj.com/article/SB124874574251485689.html#mod%3DtestMod%26articleTabs%3Darticle

---

WSJ Scoop: CFTC Will Blame Traders for Oil Spike

The Wall Street Journal has a big scoop this morning that the Obama administration is set to report next month that speculation has been a primary driver of super-volatile oil prices.
more:
http://www.cjr.org/the_audit/wsj_scoop_cftc_will_blame_trad.php

[jpak]

16. but...but...but..it was all that good ole "supply and demand" that gave us $147 a barrel oil

:evilgrin:

[redqueen]

17. What a nice surprise to see that on the front page of the WSJ today.

I was just thinking on the way in about how much of a role the greedy gaming of the energy market had to do with the current recession.

[cslinger59]

18. Anybody remotely economically saavy saw this.

This was one of those situations that really sort of made me think. I am pretty pro capitalism in general so part of me sees nothing wrong with playing the game so to speak.

The other part of me sees how much of a negative effect certain commodities can have on the entire economy and most of all the little guy scraping by. Hence I do think we need a bit more regulation.

[dixiegrrrrl]

24. "bit" more regulation??????????

[dmosh42]

19. Duh...no shit!

Of course they won't name names, but it's Goldman, Sachs & Morgan Stanley & a few hedge funds, and they're using TARP money (taxpayer funded)since that racket started. Of course this won't be 'criminal' because they're good old buddies of the Bush gang.

[pattmarty]

21. AND, the Obama "gang".

[pattmarty]

20. EVERYBODY on the DU board could have told you this.

[DCKit]

25. There were plenty of apologists posting on the speculator's behalf.

Some knew what they were doing, but were given every possible excuse from peak oil to rising demand (yeah, it was all China and India) to excuse $4+/gallon gasoline.

It wasn't until it became common knowledge that several large investment firms had rented every oil tanker on the planet and had them sitting (full) off our coasts waiting for higher prices at the refinery that they eased up.

I'd be a lot less angry if they hadn't used the TARP money as a weapon against the citizenry. We did, after all, loan it to them in the first place - to stimulate the economy, not to take even more $$$$ out of our pockets.

[elleng]

29. MANY knew this some time ago,

well before '08 election, when cftc was failing/refusing to use its authority. TARP may (or may not) be used now, but not 'before.'

It looks like this admin will go after it, nationally and internationally. And watch gas prices decline!

[Psephos]

30. And equal numbers of Peak Oilers gleefully adducing the prices as utter vindication n/t

[DCKit]

33. They sure were. It was as if we'd completely run out of oil on July 14th last summer.

No decline in supply, no warning, it was just GONE. No mas.

But God put it there when he planted those dinosaur bones, so I guess he could take it away just as quick.

[Xolodno]

22. One of the CFTC commissioners is also quoted as saying...

..."I feel smart!"

[Gin]

23. it took a year to see this? meanwhile they screwed with all industries

and made our lives miserable....what happens now? absolutely nothing...it's just words in a long overdue report that we all knew was true while it was happening!

[lindisfarne]

26. dupe of LBN thread posted 28 minutes earlier

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3989903

which is a dupe of
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3989903

[robcon]

27. Bubbles (tulip craze, Florida land, Tokyo land, internet stocks, etc.) are created by speculators.

The oil price spike was driven, as all bubbles are, by speculators thinking the price will rise forever. I think some of the speculators believed in the Peak Oil nonsense, too.

[Psephos]

31. Well and succinctly said. n/t

[bemildred]

28. Who knew people would manipulate markets to make boatloads of money?

What a surprise.

[Psephos]

34. It was to get warmed up and ready for the real $$ grab from TARP and the US Treasury

Think of it as spring training before the start of the regular season.

[steven johnson]

32. MarketOracle 2008: "The great oil crunch - fabricated crisis- by banksters and hedge fund managers"

Never underestimate the greed and manipulation that goes on with big money. They earn money the 'old fashioned way' -- they hold the economy hostage and demand a ransom. In this case they cornered the market on oil and extorted big bucks for people to purchase it back. It's the Enron deregulated economy on steroids.

Market Oracle
May 31, 2008 - 02:32 PM

By: Mike_Whitney

The Commodity Futures and Trading Commission (CFTC) is investigating trading in oil futures to determine whether the surge in prices to record levels is the result of manipulation or fraud. They might want to take a look at wheat, rice and corn futures while they're at it. The whole thing is a hoax cooked up by the investment banks and hedge funds who are trying to dig their way out of the trillion dollar mortgage-backed securities (MBS) mess that they created by turning garbage loans into securities. That scam blew up in their face last August and left them scrounging for handouts from the Federal Reserve. Now the billions of dollars they're getting from the Fed is being diverted into commodities which is destabilizing the world economy; driving gas prices to the moon and triggering food riots across the planet.

For months we've been told that the soaring price of oil has been the result of Peak Oil, fighting in Iraq, attacks on oil facilities in Nigeria, labor problems in Norway, and (the all-time favorite)growth in China. It's all baloney...

There are three things that are driving up the price of oil: the falling dollar, speculation and buying on margin.

The great oil crunch is another fabricated crisis; another "smoke and mirrors" fiasco; another Enron-type shell-game engineered by banksters and hedge fund managers. Once again, the bloody footprints can be traced right back to the front door of the Federal Reserve. Don't expect help from the regulators either; they've all been replaced with business reps like Harvey Pitt or Hank Paulson. The only time anyone in the Bush administration finds their conscience is when they're offered a multi-million dollar “tell all” book deal.

The Great Oil Price Swindle- Market Manipulation or Fraud?

[TankLV]

35. Gee - amazing what comes OUT now that we no longer have an "oil pResident", huh?!!!

it couldn't be that bush* was LYING, could it?

[Supersedeas]

38. Why ask why speculators have so much power to influence an element so VITAL to this country