[joewp]

I don't know. Are these markets that transparent? If I wanted to know who large buyers in the commodity market are is that info available? Does the futures market disclose inside buyers? I don't know these things.

Yes.

Also remember, if you are going to dump oil futures to drop the price, you must own them first.

Absolutely and completely untrue. You can short light, sweet crude futures on NYMEX just by selling one and having $4050 if you're not a member of the exchange or just $3300 if you're a member in your account for margin. See: http://www.nymex.com/CL_marg.aspx

This is completely different than shorting stocks, where you actually have to borrow the stock (at interest) to sell it. A futures contract is just that, a piece of paper for a set amount of barrels (1,000) for a set delivery date that you trade at a fluctuating price.

[MonteQuest]

I don't know. Are these markets that transparent? If I wanted to know who large buyers in the commodity market are is that info available? Does the futures market disclose inside buyers? I don't know these things.

Yes.

Also remember, if you are going to dump oil futures to drop the price, you must own them first.

Absolutely and completely untrue. You can short light, sweet crude futures on NYMEX just by selling one and having $4050 if you're not a member of the exchange or just $3300 if you're a member in your account for margin. See: http://www.nymex.com/CL_marg.aspx

This is completely different than shorting stocks, where you actually have to borrow the stock (at interest) to sell it. A futures contract is just that, a piece of paper for a set amount of barrels (1,000) for a set delivery date that you trade at a fluctuating price.

True, I stand corrected. But one would really be going out on a risky limb to manipulate price.

[zoidberg]

My main point here is that no actual buying and selling needed to take place for these tactics to have an effect... news can influence the market just as much as directly moving huge amounts of money around.

Oh, someone had to sell in order for oil futures to go down. The market moves by trades buy/sell. If your point is that the govt /repubs themselves didn't have to sell anything, true.

But yes, the price went down due to many factors in the news or not in the news:

1. The end of Katrina effects (almost)
2. The end of the Israeli/Lebanon conflict
3. A mild 2006 hurricane season
4. The end of the summer driving season
5. Simmering of the Iranian nuclear debacle
6. Profit taking

And if there is a govt spin factor, it is the big Gulf oil find re-trotted out from 2004.

Good news, even if it's old, affects the markets.

However, any serious oil future's trader who did his homework saw that news debunked rather quickly.

The speculation factor has diminished.

News, or lack of it, is hardly market manipulation.

Occam's Razor strikes again!

There are a lot of sophisticated models for the oil market out there, but basically its too large and complex to model it with any fixed degree of accuracy for any useful length of time. Plus the Bush administration is criminally incompetent. I just don't see them with the subtly and intelligence to rig that game, even if it wasn't so hellishly complex.

They have lots of money, and some oil to sell but they cant use it without those inputs radically affecting their attempts at price manipulation. The Heisenberg uncertainty principle writ large.

Also the US economy may be(is already) cycling into a recession. That alone would drop the price.

Finally we all know the alarming decline in some of the largest oil fields, and the definite absence of similar sized field to replace them. In the long run that should guarantee ever higher oil prices. (Note this doesnt contradict my earlier statements, knowing the price will be higher in 10 years isnt really useful for trading purposes)

So I'm going to agree with Montequest. Even though I would love to indulge in a conspiracy that involves electing Bush's successor.

[jbrown]

Also the US economy may be(is already) cycling into a recession. That alone would drop the price.

What makes you so sure? It didn't happen in the 70's.

[zoidberg]

Also the US economy may be(is already) cycling into a recession. That alone would drop the price.

What makes you so sure? It didn't happen in the 70's.

The housing bubble is coming down. Consumer spending was in large part financed by temporary jumps in the housing market. Some markets are stagnating, inventory is piling up, too many people are thinking of selling.

Also the oil prices rose quite rapidly. That shaved some growth off too.

itulip.com. I like reading the site. Got good stuff.

Consumer spending going down makes a lot of businesses unprofitable. That leads to job cuts, and even lower spending.

This will bottom out of course in due time. The big question is, will oil production rise to meet rising demand on the next upswing. Ie. are these cuts real or simply fortuitous to coincide with a drop in demand with that undulating plateau?

Will more costly sources of oil be able to fill supply and at what cost? What will be the new trading range to compensate for higher production costs? Will the Middle East be in flames or construction crews? Will the American dollar still be used for oil transactions? Will the American dollar be used for much of anything if inflation really takes off?

http://www.fdic.gov/bank/analytical/fyi ... 06fyi.html

[seahorse2]

Interesting article on the PO news board today by a Saudi saying the recent drop in prices was not driven by oil fundamentals.

In recent months, however, crude prices have dropped by roughly one quarter, even though 'global crude oil production is not up by a fourth,' Al-Khayyal said. 'There has been no sudden, overnight expansion of worldwide refining capacity; nor has demand slumped by 25 percent.' In other words, he said, the recent price change is not fundamentals-based, and we must look beyond the basics to find the causes;

Statement

[DantesPeak]

Interesting article on the PO news board today by a Saudi saying the recent drop in prices was not driven by oil fundamentals.

In recent months, however, crude prices have dropped by roughly one quarter, even though 'global crude oil production is not up by a fourth,' Al-Khayyal said. 'There has been no sudden, overnight expansion of worldwide refining capacity; nor has demand slumped by 25 percent.' In other words, he said, the recent price change is not fundamentals-based, and we must look beyond the basics to find the causes;

Statement

I posted a similar statement from OPEC yesterday stating that recent EIA figures about OPEC production are wrong. For example, the EIA says Saudi production was unchanged in September, but all oil tracking services state it fell significantly.

The EIA gets more publicity than stray statements from mideast members of OPEC lately.

[seahorse2]

DP,

That was a good article you posted yesterday, and you're right, fits here too as well. In the end, this argument between Saudi Arabia and the EIA makes Simmon's point, which is, we know very little about the state of the world's energy resources.

[greenworm]

True, I stand corrected. But one would really be going out on a risky limb to manipulate price.

With the capital hedge funds possess, this isn't even a risk and is heavily managed regardless.

[seahorse2]

Interesting WSJ article found by Leanan on gas price manipulation.

WSJ

[MonteQuest]

Now a couple of International Monetary Fund economists, looking through data on gas prices and legislative elections from 1978 to 2004 in 32 countries from Australia to the U.S., say there may be something to this conspiracy theory.

“Focusing on real” – inflation-adjusted – “gasoline prices alone, we observed that they declined 0.3%, on average, during ‘normal’ quarters and about 0.7% during quarters of electoral campaign.

Conspiracy theory?

How about market fear/greed during an election period?

You think people don't play the market in such times?

Again, how was it done?

The price is set by the spot market, not a phone call to somebody.

Who is flooding the market with supply?

How about the 15% oil futures speculation that is now gone?