Oh darn! I haven’t stacked enough beans and bullets yet.
http://fuelfix.com/blog/2014/12/08/hedge-funds-betting-that-opec-led-oil-rout-is-near-end/
Hedge funds are betting that the oil-price crash is close to ending.
Speculators boosted their net-long position in West Texas Intermediate crude by 14 percent in the week ended Dec. 2, the most in 20 months, U.S. Commodity Futures Trading Commission data show. Short bets contracted by 15 percent as long wagers expanded 4 percent.
Oil’s collapse accelerated after the 12-nation Organization of Petroleum Exporting Countries decided Nov. 27 to maintain output levels, underscoring the price war in crude. Oil tumbled into a bear market in October and reached a five-year low last week as the U.S. shale boom added to a global glut at a time of weakening demand growth.
“A lot of people are betting that the selloff is overdone,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund (USO) that focuses on energy, said by phone Dec. 5. “We haven’t seen these levels in years. They represent extreme value to some folks.”
More at source article
“It has been estimated that the six largest “too big to fail” banks control $3.9 trillion in commodity derivatives contracts.”
You have to look at what is actually meant by ‘control’. Many of these banks are prime clearing brokers, which means they hold contracts for others.
So if you open an account at Friendly Option Brokers, who clears through JP Morgan Chase, and buy 50 oil contracts, then your contracts show up as being held by JP Morgan Chase. However, if prices fall, it is you, and not JP Morgan Chase, who will be asked to put up more collateral. If you don’t do this, then your account will be sold out.
The primary broker/dealers make their money by facilitating transactions, not by taking actual risks.
There are more and more signs the low oil price will lead to a nation in the Middle East or Russia going on a military adventure.
When your economy is tied to one commodity, and that starts to fail, desperation builds.
And we have a State department that has no idea of history or strategy
Obama told them not to worry , the US tax payer has tons of money
This is all code for they’re going to probe around for another uncollaped vein in the arm of the US taxpayers to remove a few more liters of blood.
When it all goes under, standby by for some serious thievery. Then the wars will start and they’ll tell us how we needs to send our kids to fight them. No, this time, the war is HERE!
It has been noted on several web sites that Wall Street is now pushing Congress to have tax payers bail them out when the Derivatives Market collapses. Either way, the tax payer will be once again screwed over by the criminal elite. Good thing the DC politicians have a tax payer built subterranean fortress they can escape to, once the SHTF their lives aren’t going to be worth squat.
Pigs get fat.
Hogs get slaughtered.
Those gold futures are getting tough to sell ...
Idiotic article. The vast majority of derivatives contracts zero out.
Imagine if some new Player made $3.9 Trillion and the Too Big Too Fail banks actually failed?!
I’d throw a damn party. Then say hello to the new Trillionaires.
I hope the big banks all collapse. It is neccessary.
I read this stuff and it sounds like the mob laying off NY bets to Boston and Philly to spread the risk.
And then the “sure thing” goes terribly wrong.
The problem is the derivatives being laid off to too many counter parties. The upside is great for everyone.
The downside, not so much.
1.I do not think that the banks will fall with the oil price, they do not (or should not)have open positions. Perhaps some speculator with the wrong bet will be bankrupt, but that is the name of the game.
2. Oil prices fell to a five-year low on Monday, after Morgan Stanley cut its 2015 forecast for Brent crude, citing oversupply.
The bank said Brent crude prices could average as little as $53 per barrel in 2015, although its base case scenario was for $70. This was down from an earlier estimate of $98.
http://www.cnbc.com/id/102247766