Peak Oil News and Message Boards

Jul 28, 2009, 3:06 p.m. EST
CFTC considers strict position limits in energy trading
By Moming Zhou, MarketWatch

NEW YORK (MarketWatch) -- Commodity Futures Trading Commission Chairman Gary Gensler said Tuesday that the futures-market regulator "must seriously consider setting strict position limits in the energy market."

Gensler, in an opening statement of a CFTC hearing, said he has called his staff to research and outline "every authority available to the agency" to protect the markets and the public.

"Every option must be on the table," said Gensler, who worked for Goldman Sachs for nearly 20 years and was confirmed in May by the Senate to lead the CFTC. "We should apply consistent, across-the-board regulations to all futures-market participants."

According to law, the CFTC has broad authority in setting limits on the amount of positions a trader can take on a futures exchange. The CFTC doesn't have to prove that there is excessive speculation in a market before setting the limits.

[...]

Jul 30, 2009, 3:22 p.m. EST
CFTC to report ICE oil positions in weekly data
Moming Zhou

NEW YORK (MarketWatch) -- The Commodity Futures Trading Commission said Thursday it will report positions of West Texas Intermediate crude oil futures held by traders on the ICE Futures Europe exchange. The first publication of this data will be shown in the July 28 Commitments of Traders report, to be released on Friday. WTI crude is a type of light, sweet crude oil that's also used by the New York Mercantile Exchange as the underlying commodity of the exchange's oil futures.

joewp wrote:They're just going to make it hard or impossible for a little guy to do any energy trading. They'll make sure there's plenty of loopholes wide enough to drive a billionaire through.

Blaming volatility on speculators is a face saving way of admitting that the blamer has no idea what is going on in physical oil markets. Physical oil supply and demand explain EVERY price move in oil. As mentioned previously, blaming speculators is not simply wrong, it is dangerous. It is dangerous because it falsely diagnoses the challenges global oil supply is facing.

There is absolutely no need to change US oil markets. Yet such change now seems likely. Politics is about to raise oil prices in the US and lower them for the rest of the world.

My estimate is that certain proposed restrictions in the US will add between 25 to 50 cents per gallon onto US pump prices in the short term (1-2 years) and much more later. US price increases will subsidize price falls in other countries. This is going to hurt US business and consumers to the advantage of other nations. Each US household will transfer up to an additional US$2,000 overseas each year. A woeful vengeance is being extracted by the uninformed. Preventing such a situation was the reason for writing Oil 101.

While a very tight supply cushion at the time of 1-1.5m b/d certainly supported prices in the $90-100 range, what amazed me was the overwhelming consensus among regulators including the CFTC and academics such as Paul Krugman that prices were being driven purely by fundamentals as they soared another $50 in a matter of weeks. That view has now changed radically, and both the CFTC and the FSA in the UK are investigating the oil market with a view to imposing position limits on traders, encouraged by the oil industry itself and key users like airlines who have been whipsawed by the extraordinary volatility of the past year.

smallpoxgirl wrote:

joewp wrote:They're just going to make it hard or impossible for a little guy to do any energy trading. They'll make sure there's plenty of loopholes wide enough to drive a billionaire through.

The big issue anyway is all the multinational corporations trying to hedge their energy costs. At the same time that all the airline CEO's were screaming like little girls about the horrors of energy speculators, they were all buying oil futures like crazy. The blame the speculators game is a smoke screen. The real problem is that our energy supplies are stretched very tight, and if a significant number of the end users panic at the same time and try to hedge themselves, spikes result.

TheDude wrote:Scarce Whales: Blaming Oil Speculators = "I Don't Know"

Blaming volatility on speculators is a face saving way of admitting that the blamer has no idea what is going on in physical oil markets. Physical oil supply and demand explain EVERY price move in oil. As mentioned previously, blaming speculators is not simply wrong, it is dangerous. It is dangerous because it falsely diagnoses the challenges global oil supply is facing.

There is absolutely no need to change US oil markets. Yet such change now seems likely. Politics is about to raise oil prices in the US and lower them for the rest of the world.

My estimate is that certain proposed restrictions in the US will add between 25 to 50 cents per gallon onto US pump prices in the short term (1-2 years) and much more later. US price increases will subsidize price falls in other countries. This is going to hurt US business and consumers to the advantage of other nations. Each US household will transfer up to an additional US$2,000 overseas each year. A woeful vengeance is being extracted by the uninformed. Preventing such a situation was the reason for writing Oil 101.

Bas wrote:I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

smallpoxgirl wrote:

Bas wrote:I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

If you don't like it, find your own OPEC nation to occupy.

Bas wrote:

smallpoxgirl wrote:

Bas wrote:I'll tell you that Europe with it's sky high gas prices of 7 dollar + /gallon has been subsidizing the US.

If you don't like it, find your own OPEC nation to occupy.

LOL

The chairman of the Commodity Futures Trading Commission said on Wednesday that the agency wanted to impose new restrictions on so-called speculative traders, not to reduce price volatility but to prevent the energy markets from being dominated by a few huge investment funds.

“I believe that at the core of promoting market integrity is ensuring markets do not become too concentrated,” said Gary G. Gensler, the commission chairman. “I think we would all agree that if one party controls half the market, that party is more likely to lessen liquidity than enhance it.”