Posted on 12/01/2015 8:35:25 AM PST by bananaman22
When oil prices were spiking in 2008 and some commentators were predicting prices of $200 a barrel, many pundits and politicians turned to blame speculators and hedge funds for pushing prices upwards. That period of high prices passed and speculators avoided any tough new regulations in part due to mix empirical evidence surrounding the causes of price volatility. Now though, the opposite case is being made; hedge funds shorting oil may be behind recent volatility and the current low price of oil.
Given the benefits to consumers from low oil prices, there is little talk of new regulation to prevent hedge fund shorting, but it is unclear if regulation would do much good in any event. While there is a correlation between hedge fund positions and oil prices, it is unclear if hedge funds are causing moves in the price of oil, or if oil markets are simply responding to a third set of unobserved causal factors.
(Excerpt) Read more at oilprice.com ...
No.
Supply and demand determine prices.
Hedge funds can only try to anticipate.
No. No one and no market can ever escape its fundamentals of supply, demand and political action. Yes, there can be distortions of all kinds, but in the end, reality will always be exposed, sooner or later, by the mass of human opinion, known as “the market.”
That is the great lie of collectivists and socialists - that markets can be managed by central-planners controlling the actors.
I thought it was OPEC lowering prices to keep some countries form building up arms. Lower oil prices make ISIS smuggling less lucrative.
Look at the taxes on energy and you will find that the supply/demand curve is perverted.
Obviously.
The more you tax something, the less you get from it.
Supply and demand determine prices.
Hedge funds can only try to anticipate.
That's all that needs to be said. Unlike the stock market, with the commodities market there is a winner for every loser. Not one of these "hedge fund conspiracy theorist" have ever defined who the losers are on each of these "controlled" price swings, or why those loser would continue to lose money week after week on purpose.
Just call me Captain.
Price goes up they get the blame, goes down and nobody wants to give them their due.
No it’s supply and lower demand thanks to Obama’s recession.
Yes, and boy howdy can you get a good look at that last one (political action) by comparing gas prices across state borders. Had to go to California for the week of Thanksgiving. Topped off in Yuma, AZ on the way there. First station I came across on the CA side of the border was more than $0.80 a gallon higher than Yuma.
Blame> I’d say Credit.....
Among the silliness Congressman Peter DeFazio highlighted for his latest re-election campaign was touting a proposed financial transaction tax. In this fallacious argument, he promoted the tax as a device to lower gas prices by taxing speculators in the oil market. However, his reasoning assumed the existence of individuals capable of executing single sided transactions that overrode basic contract law and the laws of supply and demand.
In real economic activities, someone had to occupy the other side of a transaction. If speculators believed they would profit from price increases, nothing occurred until they found individuals who were equally committed to beliefs they would profit from price decreases at the agreed transaction terms. Only the most sophisticated parties survive in this environment that produces highly leveraged financial instruments. All others are simply road kill.
In DeFazio’s world huge numbers of solitary individuals scribbling on dry erase boards and shouting at walls were capable of dominating the crude oil market. They were capable of applying excruciating pressure to wring profits from tens of thousands of skilful players in an international market exceeding $2.1 trillion in annual volume.
Here in Oregon such inanity is perpetually rewarded with yet more terms in office.
Prices are low? Hmmm- we went for decades with the price under a dollar a gallon for gas, then another few decades with it right around $1.25 or so- then whamo- it skyrockets nearly overnight to over $4.50 a gallon in places, and now we’re back down to $2.40-
How In the world did the oil companies ever survive for so long with prices stagnant at around $1.25 or so? We’re now a dollar 20 more than it was for a long time- It’s just amazing to me that the price all of a sudden skyrockets when our current president takes office, SS recipients no longer get cost of living increases (while those in congress continue getting theirs), and so on- and all of a sudden this is the norm?
“No.
Supply and demand determine prices.
Hedge funds can only try to anticipate.”
It doesn’t end there. They bid up/down prices with their anticipation of demand. I recall around 2005-06 they bid up oil 1-2 bucks on every headline of an attack on x anywhere near the ME/Nigeria, or storm possibly heading towards the Gulf. Not much change in demand.
No, it’s global warming like everything else.
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