Oil Speculators

Reader comment on: Obama and the Oil Speculators

Submitted by Fast Eddie (United States), Apr 19, 2012 16:49

Just a few thoughts:

1) Whatever you call it or however you define it, 'speculation' in commodities futures markets is legal

2) For many years, crude oil was traded on the 'Merc' (the NY Mercantile Exchange) and there was an open 'price discovery mechanism' so buyers and sellers knew what was happening

3) A few years ago, a couple of the TBTF so-called 'banks' decided that the open flow of information at the NYMEX was slowing down their profit making, so they: (a) bought some of the oil storage facilites in Oklahoma so they could control, to a significant degree, apparent oil inventories of 'light sweet crude' and thus manipulate futures prices and: (b) they formed the ICE (Intercontinental Exchange) which trades in London (altho physically located in the U.S.) crude oil futures for Brent 'heavy crude' which they can manipulate because the ICE is essentially a 'dark market' where price information flow is almost nonexistant

4) The enormous increase in speculative activity in oil futures has led to equally enormous increases in the volatility of crude oil prices. Just look at the price charts for the past few years to see what's been happening. This whipsawing of prices is harmful to consumers worldwide but is the bread and butter of the manipulators. Year-to-year actual changes in crude oil worldwide supply and demand have not varied more than a couple of percent in any year for the past decade while crude prices have swung wildly over the same time.

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