CFTC Chairman: 90 Percent Of Bets On Rising Oil Prices Come From Speculators

[ProSense]

CFTC Chairman: 90 Percent Of Bets On Rising Oil Prices Come From Speculators

By Pat Garofalo

This week, Commissioner Bart Chilton of the Commodity Futures Trading Commission — the federal agency charged with overseeing the nation’s commodities markets — said that consumers are paying a “Wall Street speculative premium” at the gas pump. “I think there’s good evidence that excessive speculation is heating up the market and prices have gotten out of line as a result,” he said. In a speech yesterday, CFTC Chairman Gary Gensler confirmed this analysis, releasing data showing that nearly 90 percent of traders betting that oil prices will rise are speculators, not traders interested in ever holding actual oil:

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As McClatchy explained, “that means that 88 percent of bets on price hikes for oil were held by financial players — mainly Wall Street banks and hedge funds that invest for the ultra wealthy — not interests seeking to use the oil.” Since 1990, oil speculators have more than doubled their share of the oil market, making up 68 percent of oil traders last month. Even ExxonMobil CEo Rex Tillerson admitted that speculation is driving up the price of oil, estimating that the price of a barrel should be closer to $60 if governed exclusively by supply and demand.

Under the Dodd-Frank financial reform law, the CFTC was given the ability to crack down on excessive speculation in the oil market, but it has yet to act, due in part to reluctance on the part of conservative members of the commission. However, Gensler said yesterday that “it is essential to complete the task of implementing the aggregate position limits regime, Congressionally mandated to guard against the burdens of excessive speculation.” Last month, the CFTC finally charged traders for artificially driving up the price of oil in 2008.

[no_hypocrisy]

1. Seems like a rigged bet with a self-fulfilling prophesy.

Speculators bet that the future price of oil goes up. Hedge funds buy supply and withhold it from the market. Big demand, little supply, higher price. Speculators win.

[kysrsoze]

2. Yeah, then they all go short and ride it all the way down. I won't hold my breath on prosecution.

[Hutzpa]

3. Here is how this works

Speculators buys oil tanker on a cheap, say for about $25, transfers crude oil to another tanker for
a price of $40 while at the same time hedge fund buyers are alerted to start working on increased
oil prices on the market.

All this is going on while the oil tanker is sitting on the gulf of Mexico waiting for further
instruction on their next crude transfer to another oil tanker which will then off load it's
crude at New Orleans for a price of $80 - $90 which is then used at the world market.

Despicable yes, but this is what is going on as I type, wanna crack down on this, talk to the coast
guards because they have all the nautical readings of every tankers on the gulf of Mexico, they also
have documents that shows how many crude is on board each and every tankers on the gulf as this is
needed in case of emergency.


My 2cents.

Happy Birthday.