Speculation in Oil

By: ispeculatornew
Date posted: 06.09.2008 (9:44 pm) | Write a Comment  (5 Comments)

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I read a lot of articles about the price of oil and I have read quite a few lately that quoted some moron claiming the steep rise in the price of oil has had nothing to do with speculation. These morons claim that oil is trading solely on supply and demand fundamentals. That is absolutely absurd.

Last Friday oil had its biggest one day gain ever and oil gained more than sixteen dollars (over thirteen percent) in just two days. Was there some major supply disruption? Nope. The catalysts for this rise were a call by a Morgan Stanley analyst for $150 oil by July 4 and a threat made by Israel against Iran. If a pump by a brokerage firm and a threat of a supply disruption don’t scream speculation I don’t know what does.

I find it very disconcerting that Goldman Sachs and Morgan Stanley continue to pump oil futures. I read in an article the other day that both of these companies own large amounts of oil futures through their hedge funds. This makes Goldman Sachs and Morgan Stanley no better than a boiler room operation pumping penny stocks.

Furthermore, I find the lack of disclosure in articles about oil very troubling. If you read one hundred articles quoting either Goldman’s call for $200 oil or Morgan Stanley’s call for $150 oil you might read one that actually discloses these that companies own large amounts of oil futures. This should be disclosed in every article because it shows they are obviously biased. Also, anybody that thinks that the trading divisions of these companies are independent from their analysts divisions is naïve at best.

I think it is pretty obvious that speculation has been driving the oil market for a while and I wouldn’t be surprised to hear that the CTFC finds that Goldman Sachs and Morgan Stanley have actually been manipulating the market.

Disclaimer: I do not have a position in oil futures, Goldman Sachs, or Morgan Stanley.

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5 Comments

  1. Comment by David Weaver — June 14, 2008 @ 9:35 am

    Incredibly one of the finest articles to date with such an important indifference to the hoards of distractions made by pump and dump scam artist.

    In the past three years I have heard many preposterous statement made by OPEC and the Saudis that they are pumping crude and maximum production. Then just yesterday the Saudi minister came out and said they would be increasing production by 10 Million barrels.

    Its seems to me that they honestly believe the whole of the world must have been pretty a sleep!

    Speculation, manipulation or just plain greed makes no real difference these crooks have blackmailed the world and nothing more needs be said.

    Thank you, once again your post was so appreciated!

  2. Comment by admin — June 15, 2008 @ 3:52 pm

    You are very welcome.

  3. Comment by Lyn1yn — June 19, 2008 @ 2:26 pm

    I guess the question is, “who are these Speculators?” I think the answer mmight be who needs to raise money at this time… maybe the following will shed some light…

    updated 11:34 p.m. ET, Wed., June. 18, 2008
    Wall Street banks and other large financial institutions have begun putting intense pressure on Congress to hold off on legislation that would curtail their highly profitable trading in oil contracts — an activity increasingly blamed by lawmakers for driving up prices to record levels.

  4. Comment by admin — June 19, 2008 @ 6:39 pm

    Good find.

  5. […] there can no longer be a debate about whether the excessive rise in oil futures was due to speculation or supply and demand fundamentals. It was obviously due to speculation. In fact, the last thing oil was trading on during its run was […]

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