Oil prices to be probed by US regulator CFTC

The Telegraph ^ | 05-30-2008 | By James Quinn, Wall Street Correspondent

[Toddsterpatriot]

But I know you cannot make money if you don’t sell and future contracts expire. You don’t get your money back, you pay for the right to buy at that price and it just goes away if you don’t use it, 100% loss.

You're confusing futures with options. Options can expire worthless and "just go away". The futures contract does not "go away". The seller must deliver and the buyer must accept delivery, if they haven't closed out their position prior to settlement date.

[11th Commandment]

I’m reading your link too! What has me boiling is at some point this will burst. Remember when gas dropped from $3.00 to $2.00 in the Fall of 2006? If this happens again with all 25 commodities and financial institutions tank, pensions funds lose value, etc., I guess the tax payer will be footing that bill as well! We pay on the way up and bail them out on the way down!!!!!!

[Gvl_M3]

Just for the record,

The link is AndyJackson’s. I just copied it again.

But, I agree with you. This will be like Enron where people loose their lifetime retirement once the market forces start to work.

TFH time (Tin Foil Hat)
I wonder if that is why the President is slow to react. Maybe he has inside knowledge that if ANWAR is opened up, the market will crash and lives will be ruined.

Maybe this “investigation” is being drug out to give the institutions time to get out of the futures market.

[11th Commandment]

FROM MICHAEL MASTERS TESTIMONY: The huge growth in their demand has gone virtually undetected by classically-trained economists who almost never analyze demand in futures markets.

This is why Walter Williams missed this in his article this week. This has me concerned because bankers are classically trained as well. I bet these banks have no flipping idea what they are involved in and how bad they will be hurt WHEN this ponzy scheme backfires. A childhood friend of mine works at a large bank that got creamed by the sub-prime mortgages. I asked him how executive management did not know how exposed they where to these instruments... he basically said that they are not trained in all financial aspects; company is too big; and exposure was spread out throughout the organization opaqueing the risk.

I worked in banking and everyone remembers Nick Lesson who brought down Barings Bank. How many Nicks are out there right now snowing gray-haired bank executes and bamboozling regulators. You can’t keep buying up forever, the bigger fool theory catches up to you. So who will bail out the next Barings/Bear Sterns? THE TAX Payers! We pay on the way up, and Bail out on the way down.

[SAJ]

Hack, Toddster is exactly right. If a guy who is long 1 futures contract just sits still, his contract doesn't 'go away'. A seller will deliver 1000 bbls WTI @ Cushing to him w/in a couple of weeks of the contract expiration, and he'll have to pony up $130K or so. And, of course, this is multiplicative if he owns more than 1 contract.

The way the pros ''stay long'' and don't mess about w/contract expiration is, as expiration nears, to roll: sell off this month's longs and repo the same (or more) in a contract month further out.

[Red Badger]

has Soros been implicated in any of this by name???

Only here.......

[thackney]

You're confusing futures with options.

Thank you for the clarification.

[thackney]

Remember when gas dropped from $3.00 to $2.00 in the Fall of 2006?

When Hurricanes Rita and Katrina took out platforms and refineries in the gulf coast? Yeah, the friends of mine that 12 hour days, 7 days a week for months trying to restore production remember it well.

Not quite a speculative bubble back then.

[thackney]

Thanks as well.

[thackney]

Sorry.

If I sounded like a fool mixing up 2005 and and 2006.

That's because I was.

Similar price moves both falls. Not the same cause.

My mistake, sorry again.

[AFreeBird]

Supply is one thing, refining capacity is another, and we're running full bore, or close to it. Great supply is nothing if you can't refine it fast enough. And then there's the problem of all the different regional and seasonal blends refineries have to deal with.

Picking one or two seasonal blends for the entire nation would help. Adding to our refining capacity would be another step in the right direction.

[Toddsterpatriot]

After all the great information you provide, I'm glad I could provide a little for you.

[thackney]

Supply is one thing, refining capacity is another, and we're running full bore, or close to it. Great supply is nothing if you can't refine it fast enough

2/3 of the oil running through US refineries is imported. We could increase our production if given access to many areas now off limits. Then we could import less oil from OPEC. The majority of our crude oil imports is from OPEC. We do need more refinery capacity, but we import 10 MMBPD of crude oil and about 1 MMBPD of gasoline.

[kcm.org]

Ed Wallace was hammered by ICE [International Exchange] until the CFTC said they were going to delve into these fraudulent crude oil prices Thursday.

MSM now has to back off the $200/bbl stories and rice prices will explode, starving everybody!

America is SOOOOOPO fabulous!!!!

[kms61]

I’ve been told by people in the oil and gas business that there are lots of loaded tankers parked off the coasts waiting for the price to go even higher. Not only keeping that oil off the market, but making the tankers unavailable to ship more oil. I can’t vouch for that, but I’ve heard it from more than one person.