Thread: Archive Latest News - Think Tank - 15/04/08 - 26/08/08

Are speculators driving up oil and gasoline prices?

A key federal regulator said Thursday that it's been probing whether speculators are manipulating the price of oil and gasoline and announced a series of measures to make the opaque world of oil trading more transparent.

In a surprise announcement, the Commodity Futures Trading Commission (CFTC) confirmed that since last December it's been investigating the trading of contracts for future deliveries of oil, commonly called futures contracts.

"Although the commission ordinarily conducts enforcement investigations on a confidential basis, the commission is taking the extraordinary step of disclosing this investigation because of today's unprecedented market conditions," the statement said. "The specifics of the ongoing investigation remain confidential. All commission enforcement inquiries are focused on ensuring that the markets are properly policed for manipulation and abusive practices."

Although disclosing the investigation helps give the impression that Washington is acting to curb abuses that may be helping to drive up energy prices, it also could tip off those who are being investigated. Commission spokesman R. David Gary told McClatchy "given the prevailing market conditions and that they are of unprecedented nature," the disclosure was necessary.

"While these investigations are time- and resource-intensive, obviously a considerable amount of time has elapsed since the investigation" began, he said.

The acknowledgement of the probe seemed to suggest that there might be some truth to rumors of market manipulation. Normally, probes are kept quiet to avoid damaging reputations if no wrongdoing is uncovered.

If speculators are running up oil prices, the obvious next question is by how much?

Former Federal Reserve chairman Alan Greenspan has guessed that speculators may add at least $10 to the price of a barrel of oil. Other analysts have put the figure as high as $20.

A barrel of crude oil contains 42 gallons of oil, but a $1 rise in per-barrel costs doesn't translate an equal increase in the cost of gasoline. According to the American Petroleum Institute, crude oil costs about $1.09 more per gallon since Jan. 1, while gasoline has risen about 70 cents per gallon.

It's hard to say how much speculation has contributed to higher energy prices because growing global demand for energy and shrinking oil production have prompted fears of supply disruptions. Traders factor in a so-called risk premium into the price.

The unusual CFTC announcement followed several congressional hearings, the latest on May 20, where a prominent hedge fund manager testified that speculators in commodities markets are running up the price that ordinary Americans pay for gasoline and food.

"You have asked the question, 'Are institutional investors contributing to food and energy price inflation?' And my unequivocal answer is 'YES,' " Michael *******, a portfolio manager for ******* Capital Management, said in prepared testimony.

******* runs a hedge fund that invests pools of money on behalf of wealthy investors, and he told senators that the prices of most major commodities such as wheat, corn and oil have doubled and in some cases tripled over the past five years while supplies of them are adequate. The reason, he said, "is a demand shock coming from a new category of participant in the commodities futures markets: institutional investors."

Commodities markets have always attracted speculators who try to make fortunes by betting on the shifting prices of everything from pork bellies to oil. But today's commodities markets are flooded with money from deep-pocketed investors such as corporate and government pension funds, university endowments and foreign-owned investment vehicles called sovereign wealth funds.

These players, called index speculators, far outnumber the investors who plan to take delivery of a barrel of oil or a bushel of corn. Index speculators tend to distribute their money across an index of two dozen or so major commodities and essentially bet that prices will go up. In industry parlance, they "go long."

In the stock market, this strategy of buying and holding is normal. But trading in most commodities happens on a much smaller scale, so these indexed investments are overwhelming trading.

"You cannot throw this much 'long' money into a relatively small market without the ability to have a supply response and prices not go up," said Howard Simons, the president of Rosewood Trading, an economic research firm in Glenview, Ill. "It has to go up."

McClatchy Washington Bureau | 05/29/2008 | Are speculators driving up oil and gasoline prices?

Any info or articles post on this thread, from any site.CROW

I've just scouted around and found 5 dinar forums down in the last week or two including this one. Four are still down. But not this one anymore.

That is odd though.

Originally Posted by Seaview

I've just scouted around and found 5 dinar forums down in the last week or two including this one. Four are still down. But not this one anymore.

That is odd though.

Seaview, just keep posting as much info as you can, maybe others will join in , if they know of this site.CROW

Well you know where is speculating that the CBI is behind it. But they would, wouldn't they.....

Iraq's deputy PM says renewed 'will' to finish Oil Law

There is fresh political will to complete a long-awaited oil law designed to pave the way for international investment in Iraq's oil sector, Iraq's deputy prime minister said on Thursday.

Investment, crucial to developing Iraq's oil resources, has been held back by repeated delays to the law. The draft being negotiated was first agreed by the Cabinet in February 2007.

"There is now renewed political will to bring the negotiations on the legislation to closure," Iraq's Deputy Prime Minister Barham Salih said.

The proposed law would create a framework for investment, Salih said in a speech to a conference in Stockholm, but he said it could not be hurried.

"Despite the need for the legislation, this is not a matter that can be rushed. Iraq will need space and time to resolve those issues on the basis of consensus," he said.

Even without the law, Iraq has begun the process of luring in international oil firms and its output has begun to recover.

A senior Iraqi oil official said earlier this month, Iraq was on course to lift shipments to a post-war record above 2 million barrels per day (bpd).

"Pending the adoption of the legislation, we should work hard to continue to increase output and exports and negotiate various forms of cooperation with our partners," Salih said.

Over the next three-to-four years, he said Iraq planned to develop its capacity to at least 6 million bpd.

Iraq's deputy PM says renewed will to finish oil law | Markets | Reuters

hey, guys. this is too weird. what is going on where these websites being down

Originally Posted by Seaview

Well you know where is speculating that the CBI is behind it. But they would, wouldn't they.....

No, I don't feel it is the CBI, but someone put some effort into knocking out the sites!

Lol - they certainly have!

Apparently it is not just 'dinar forums'. Although I have seen no evidence of it being other forums. I just visited M.M.G and Talkgold and they are both fine.

crow
what is going with the iraqi dianr forum is down where is every one at where is bamboo