Oil trade's winners now reap the wrath

Los Angeles Times ^ | May 24, 2008 | Tom Petruno

[RayChuang88]

Investing in commodities has been a brilliant move in this decade -- so brilliant that the strategy has attracted untold numbers of large and small players, particularly in the last few years.

What do you suppose all of their buying has done to the price of oil? Pushed it down?

With crude surging above $130 a barrel this week for the first time, a long-simmering issue is threatening to boil over: the role these new investors, often derided as rank speculators, have had in stoking the prices of oil and other commodities.

Their standard line has been, "It's not our fault." They point to rising demand for raw materials in China and other developing nations and to tight supplies as the main drivers of prices.

But at a Senate hearing Tuesday, a hedge fund manager named Michael Masters offered a different viewpoint.

He branded institutional investors such as pension funds as "one of if not the primary factors affecting commodities prices today."

[RayChuang88]

I've heard on CNBC and read from several news sources that commodities hedge fund traders could be controlling as much as forty percent of the price of oil, driving it up to make a profit at the expense of the rest of the economy.

That's why you REALLY have to openly wonder if one George Soros--a notorious fund trader that heavily contributed to the Asian financial crisis of 1997-2000--may be one of the driving forces behind this. Soros could have had quiet "handshake" agreements with powerful people like Warren Buffett, traders in Europe, traders in the United Arab Emirates, traders in eastern Asia, and quietly sent slush fund money to Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad to deliberately sabotage the petroleum market to ensure a Democrat in the White House.

[mainerforglobalwarming]

I'm to the point now where I say let's do what liberals want and spread the misery around. Let's destroy Venezuela’s and Iran's oil fields and send the world into a complete mess. Then we'll have no choice but to drill and explore for oil in the nation.

[Normal4me]

I’m with you. I also think we should just all show up at the local welfare office with our hands out. If they want to destroy our economy, let’s help by bankrupting this government even more.

[ishabibble]

Very astute assessment. George Soros wants to be “king of the world”, IMHO, and this is exactly how he plans to accomplish this, and that's why he backs a weakling like Obama, who will be so easy to manipulate.

[mainerforglobalwarming]

A month ago I believed that McCain was going to win easily, and that the gop was going to regain congress. I thought McCain would wise up and act like Romney, as a conservative. But no, amnesty is back on the table and McCain's green thumb is going to bankrupt us. Then we've got a gop congress that has gone brain-dead. Instead of a new, conservative contract with America that would lead to victory, we get the communist manifesto as their guiding doctrine.
So with Obama set to become president with 62 democrats in the senate, 260 in the house, it's over for this nation. Bush might as well make himself useful in his last few months and send Iran's economy into oblivion. Maybe as our troops are being sent home from Iraq, the Iraqi's will have a 2 or 3 percent chance of succeeding if Iran doesn't have the resources to supply the militias and al-qeada.

[tx_eggman]

Very astute assessment. George Soros wants to be “king of the world

The nice thing about real life is that, while Soros might wind up "king", it'll only be for the blink of an eye in the grand scheme ... then comes judgement.

[PSYCHO-FREEP]

I respectfully disagree with your belief that if Obama wins, “it’s over for this nation.”

On the contrary. We have survived Democrats in the past, we will do it again. Don’t forget, that Reagan took over after one of the worst Presidencies in our history. He was against a 65% Democrat majority in the House and Senate that had held that majority for the last 40 years, faced double digit unemployment, double digit inflation, double digit interest rates and an economy in complete ruin. The media covered for Carter, calling it a “mild recession”, when it was in reality, a full blown depression.

Reagan was proof that the right man can turn things around in a hurry. It takes a truly principled President with strong Conservative ideals to make that happen. There are no substitutes.

This election, there is no current candidate any where like that. The current GOP choice would certainly have the same effect that Carder did on the country and would accelerate the decline, leaving the public blaming the GOP for the mess and further guarantee our losing more seats and future Presidencies.

There is MUCH at stake here. Voting for McNasty out of fear of the other party, and being willing to overlook all the warning signs because there is no other option, is simply the very thing that will guarantee the end of the GOP.

It’s just that realistically simple.

[mainerforglobalwarming]

I hate it when liberals say ‘can we stop using labels. But maybe we should call the gop and the democrat party liberal parties filled with liberals.
Once the 30 million illegals legalized voters, and they’ll be fast tracked for 2012 I’m sure, there’s no coming back. Anyone that stands in their way of the welfare check will be voted against.

[Thebaddog]

That's why you REALLY have to openly wonder if one George Soros--a notorious fund trader that heavily contributed to the Asian financial crisis of 1997-2000--may be one of the driving forces behind this.

Stretch that thought into the idea that he might be funding political campaigns for the democrats with all those profits. Who really knows who those Internet donees are. Someone could be manufacturing accounts for deposit.

[trek]

Spot on except for one thing. George Bush is not going to finish off the Mullahs or any such thing. He is heading back to the ranch for a hardy "Well Done!" from Daddy and the rest of global elites for destroying America's last, best hope: the conservative movement.

[Robert A Cook PE]

I too am very, very suspicious of the “invisible” oil traders who are driving the oil prices up.

Deliberately? Certainly.

But if (when ?) we find out WHO they are, then the motives becomes more clear. It may not be Soros. But artificially driving up (then down) prices after a country or industry is locked into a commitment IS a tactic that Enron and Soros have used before.

Soros is determined to destroy the US, and manipulating oil prices is a good fast way to do it.

[Oldexpat]

I am a small oil trader..and I don’t drive up prices, because I never take delivery of a contract or store it waiting for a hire price. All commodities have futures..and they only help to stabilize prices. Usually the small guys loose, since they tend to follow the bubble up and down.
What you all need to understand that even a small shortage..can cause a violent up tick in real prices consumers pay(consumers are refiners and retail)..
Conservatives need to defend our free enterprise system..and until you start seeing tankers lined up full and waiting for higher prices(Like Iran maybe)..speculators are not creating the shortage.
I hedge on these..because I am a consumer of oil and want to make some of the profit to cover my growing cost of fuel for my vehicles..RV and car. With diesel selling at 4.64..and getting 12mpg..I can use it. So when I think oil companies or oil is selling cheap..I buy. So far it is working. I have more than covered all my fuel costs in a soaring situation.
So wise up conservatives..we live in a free country for the time being. I would like to see if freer and have less taxes..so I will take my best shot at voting for McCain and GOP.

[Oldexpat]

I am a small oil trader..and I don’t drive up prices, because I never take delivery of a contract or store it waiting for a hire price. All commodities have futures..and they only help to stabilize prices. Usually the small guys loose, since they tend to follow the bubble up and down.
What you all need to understand that even a small shortage..can cause a violent up tick in real prices consumers pay(consumers are refiners and retail)..
Conservatives need to defend our free enterprise system..and until you start seeing tankers lined up full and waiting for higher prices(Like Iran maybe)..speculators are not creating the shortage.
I hedge on these..because I am a consumer of oil and want to make some of the profit to cover my growing cost of fuel for my vehicles..RV and car. With diesel selling at 4.64..and getting 12mpg..I can use it. So when I think oil companies or oil is selling cheap..I buy. So far it is working. I have more than covered all my fuel costs in a soaring situation.
So wise up conservatives..we live in a free country for the time being. I would like to see if freer and have less taxes..so I will take my best shot at voting for McCain and GOP.

[PSYCHO-FREEP]

You had me all the way up to your last sentence.

[ishabibble]

If only...you seem to think that madmen burst into flame. They don’t. Castro, Kim-jong-forever, and the Mad Mullahs of Iran prove it beyond all doubt.

I say we nuke ‘em! Let’s start over with an eye towards democracy and the rights of the human beings!

[lexusppd]

It's a bubble. Like all bubbles, real estate, tech, you name it, it will end badly for the poor suckers in last. In time, and I have no crystal ball, the crash will be upon us. There will be no warning and it won't happen in a day but will begin slowly on a bit of negative news for traders. When the pros, who know more about trading and what to look for in getting in or out, do not buy on the dip, the slide will continue and then begin to accelerate. Soon enough people will be looking to get out of their contracts that there will be an imbalance which the market makers will be unable to easily control. Finally we get to the “get me out and I don't give a sh*t what the price is” time and the blood will run in the streets (or the trading pits).

Oil will again be where it belongs today, at about $55-60bbl

[lexusppd]

Keep in mind that McCains first job is to get elected. After that we will see what we will see about his actions. In any case we know the WOT waill be prosecuted diligently and with his full commitment. This alone will set the animals in the M.E. back on their heels as they see their chance for an Obama pull out go up in smoke.

[Marcella]

You are absolutely correct.

[VideoDoctor]

It's a bubble.

You're right. It's just another cycle in the eternal chase of the almighty dollar.

[IronJack]

I've believed this from the outset. Speculation in any commodity, especially one as volatile as crude and refined fuels, can't HELP but have an impact on price. Only a fraction of these speculators ever intend to take delivery, so their participation in the market only serves to create an artificial demand that drives the price for the real commodity higher. This isn't about "hedging"; it's about an entire industry of parasites artificially manipulating the market -- and the PERCEPTION of the market -- so as to make a lot of money for doing nothing.

In the old days, they were called "profiteers," and it wasn't unusual to see them hanging from lampposts when an enraged and exploited populace finally figured it out.