T
T-Bone
Well-known member
Last edited:
Stop High Gas Prices!!!
- Thread starter mac770
- Start date
YOU ARE ABOLUTELY RIGHT. Here is how it went down. Ken Lay and the Enron board lobbied in early 2001 to create the "Enron Loophole". I'm still shocked the actual piece of legislation was so brazen to call itself that, but its true. It was passed into legislation which effectively allowed Enron to purchase energy (primarily electricity) on the dark markets. This loophole led to the California energy crisis, as well as the Snohomish Energy scandal in Washington State.
To clarify dark markets, and to build on this story, follow the next piece closely. The Inter-Contenential Exchange (ICE) is located in Atlanta, GA and is regulated by the CFTC (a federal agency set up to regulate commodities trading and ensure a monopoly of stocks are not acquired). In 1999 IPE (based in London and regulated by the European foreign board of trade) purchased ICE. In 2001, IPE decided it wanted to enter into the American markets and trade crude oil, but the only way they could enter the American markets and have access to WTI Crude (West Texas Intermediate) is through their new trading company ICE, again located in the states. So IPE submitted a request to the CFTC asking for a "no action" letter effectively allowing IPE to purchase WTI, via ICE, but regulated under the European regulatory agency. CFTC granted that letter, opening the door wide open to this trading practice.
The European trading regulation doesn't have position limits, non-commercial limits, and doesn NOT require at any time for a trading company to report their trading activities. This means that anyone, at any given time, can trade as much as they want -- drive the price up by taking product out of the market, and then selling that same product for a gain. As someone said above, commodities trading is healthy. Liquidity in the markets are necessary. I've never argued that point. But EXCESSIVE and MANIPULATIVE trading is wrong, and should be dissallowed.
What S 3268 does is force CFTC to remove those no action letters and require them enforce the rules they already have on the books. To a certain degree, CFTC already has the authority, they are choosing not to exercise it. WHY? Because there are "friends" in the business that are making loads and loads of money on these trades. I mean billions of dollars.
As we started working through this process, we realized there are several "no action" letters that were authorized by the CFTC. Michael Greenberger, who was the original author of the no action letter template, now has testified in congress several times that the letters had unintended consequences and the trading markets are now running rampid with unethical traders as a result.
What we are asking for is a return to normality. Standard and transparent commodities trading that allows people who are actually in the business of providing petroleum servies to trade that product at its FAIR value. Goldman Sac and Morgan Stanley owned more barrells of crude last year than any one company -- and they never took delivery of one single wet barrell. But they drove the prices up to over $145/barrell and made their stockholders a crap load of money.
Chew on this... on any given day on the ICE, there is up to 20 times the US Annual Consumption traded on the dark market. Those trades cost money and drive prices up. Why would anyone need to trade that much fuel on any given day?
To clarify dark markets, and to build on this story, follow the next piece closely. The Inter-Contenential Exchange (ICE) is located in Atlanta, GA and is regulated by the CFTC (a federal agency set up to regulate commodities trading and ensure a monopoly of stocks are not acquired). In 1999 IPE (based in London and regulated by the European foreign board of trade) purchased ICE. In 2001, IPE decided it wanted to enter into the American markets and trade crude oil, but the only way they could enter the American markets and have access to WTI Crude (West Texas Intermediate) is through their new trading company ICE, again located in the states. So IPE submitted a request to the CFTC asking for a "no action" letter effectively allowing IPE to purchase WTI, via ICE, but regulated under the European regulatory agency. CFTC granted that letter, opening the door wide open to this trading practice.
The European trading regulation doesn't have position limits, non-commercial limits, and doesn NOT require at any time for a trading company to report their trading activities. This means that anyone, at any given time, can trade as much as they want -- drive the price up by taking product out of the market, and then selling that same product for a gain. As someone said above, commodities trading is healthy. Liquidity in the markets are necessary. I've never argued that point. But EXCESSIVE and MANIPULATIVE trading is wrong, and should be dissallowed.
What S 3268 does is force CFTC to remove those no action letters and require them enforce the rules they already have on the books. To a certain degree, CFTC already has the authority, they are choosing not to exercise it. WHY? Because there are "friends" in the business that are making loads and loads of money on these trades. I mean billions of dollars.
As we started working through this process, we realized there are several "no action" letters that were authorized by the CFTC. Michael Greenberger, who was the original author of the no action letter template, now has testified in congress several times that the letters had unintended consequences and the trading markets are now running rampid with unethical traders as a result.
What we are asking for is a return to normality. Standard and transparent commodities trading that allows people who are actually in the business of providing petroleum servies to trade that product at its FAIR value. Goldman Sac and Morgan Stanley owned more barrells of crude last year than any one company -- and they never took delivery of one single wet barrell. But they drove the prices up to over $145/barrell and made their stockholders a crap load of money.
Chew on this... on any given day on the ICE, there is up to 20 times the US Annual Consumption traded on the dark market. Those trades cost money and drive prices up. Why would anyone need to trade that much fuel on any given day?
Hmmm, I think something smells fishy here.
I believe the Democrats closed the so called Enron loop hole in the Farm Bill. You should be highly sceptical of anything that the democrats are trying so hard to push for more regulation. There is tons of info on this. Educate yourself before you start signing sh!!t. Here is an example.
July 24, 2008
Oil Speculators Help Consumers at the Gas Pump
by David Kreutzer, Ph.D.
WebMemo #2003
Markets can operate efficiently even when people don't understand how they work. On the other hand, policymakers can do untold damage when they don't understand how markets work. A case in point is the current misguided Senate proposal to regulate petroleum futures markets.
A 2006 study by the Senate's Permanent Subcommittee on Investigations (SPSI) is used by those claiming a causal link from futures market speculation to higher petroleum prices.[1] However, evidence since publication unequivocally disproves that finding—using the SPSI's own logic.
How Speculation Can Raise Prices
The only way that oil futures markets can affect price at the pump is by changing the amount of gasoline delivered to gas stations. This can happen, but it requires a specific chain of events.
Take agricultural markets. Farmers will not sell corn from their silos for $4/bushel today if the price for delivery next year is $8/bushel, because they will make more profit by waiting and selling it at the higher price, even with storage and carrying costs. Therefore, the high futures price can cause less corn to be supplied today as farmers stock up in anticipation of next year's higher price.
Because many farmers will take advantage of this opportunity, today's price rises. At the same time, next year's price goes down because more corn has been stored for use at that time. The only difference in price will be the storage and carrying cost.
It is possible, though, that a bubble will emerge: Speculation on futures markets can hold too much corn off the market and raise price to an unsustainable level. However, the speculative bubble will pop when the silos can hold no more corn or when farmers start to unload their inventories. At that point the price of all the corn—both on the spot market and in the silos—plummets, and speculators lose their shirts.
The SPSI Guessed Wrong
One characteristic of a speculative bubble is the simultaneous increase in price and increase in inventories. This supports the theory that a speculative bubble is increasing today's price, but without rising inventories, there can be no link between higher futures prices and an impact on the current supply and current price. This is true for corn, wheat, and anything traded on futures markets, and it is true for petroleum as well.
In fact, the SPSI report makes dozens of references to this critical link between higher prices and growing inventories. Indeed, it is the primary evidence presented to support their finding of a speculative bubble.
But the SPSI misunderstood what was happening. This critical link between higher prices and higher inventories is also evidence of something else entirely: futures markets and speculators effectively anticipating tighter markets and rearranging consumption patterns to soften the blow on consumers. The price response when inventories are sold tells the story.
If, after a period of simultaneously rising prices and inventories, the inventories are reduced and the price holds steady or rises, then there was no speculative bubble after all. This pattern would instead be confirmation that futures markets anticipated higher prices but didn't cause higher prices. That is, in aggregate, traders on the futures markets correctly anticipated deteriorating supply and demand conditions, saved petroleum for the worse times, and provided additional barrels when they were most needed.
This is, in fact, exactly what we have seen. At the publication of the SPSI report, American petroleum inventories were at a record high of 347.5 million barrels while price was at $70 per barrel (not including the Strategic Petroleum Reserve). By the summer of 2008, these inventories had dropped below 300 million barrels while prices made their most dramatic rise in history. As the SPSI report made clear, speculation in futures markets cannot cause price increases when inventories are drawn down.
Having not seen the drawdown of inventories, the SPSI was itself only speculating as to the cause of the higher prices in 2006. It bet on a speculative bubble. We now know it was a harbinger of a tighter market.
Far from supporting a claim of speculator-caused petroleum price increases in 2008, the logic of the SPSI report combined with more recent evidence makes clear that futures markets built up oil supplies for the correctly anticipated rainy day. The over 50 million barrels that were, in effect, transferred from several years ago to this year saved the economy $3.5 billion.
On top of this, futures markets and speculators have other critical functions, such as providing liquidity and reducing risk for both consumers and producers.
More Oil, Not More Regulation
Based on a gross misunderstanding of how futures markets work and what they do, current proposals to hobble futures markets with additional regulation will harm both consumers and producers of petroleum and petroleum products. A better solution is to increase access to new energy sources. If new sources of oil are allowed to be used, futures markets and speculators will lower the future cost of oil, which will translate into lower fuel prices at the pump.
David W. Kreutzer, Ph.D., is Senior Policy Analyst for Energy Economics and Climate Change in the Center for Data Analysis at The Heritage Foundation.
I believe the Democrats closed the so called Enron loop hole in the Farm Bill. You should be highly sceptical of anything that the democrats are trying so hard to push for more regulation. There is tons of info on this. Educate yourself before you start signing sh!!t. Here is an example.July 24, 2008
Oil Speculators Help Consumers at the Gas Pump
by David Kreutzer, Ph.D.
WebMemo #2003
Markets can operate efficiently even when people don't understand how they work. On the other hand, policymakers can do untold damage when they don't understand how markets work. A case in point is the current misguided Senate proposal to regulate petroleum futures markets.
A 2006 study by the Senate's Permanent Subcommittee on Investigations (SPSI) is used by those claiming a causal link from futures market speculation to higher petroleum prices.[1] However, evidence since publication unequivocally disproves that finding—using the SPSI's own logic.
How Speculation Can Raise Prices
The only way that oil futures markets can affect price at the pump is by changing the amount of gasoline delivered to gas stations. This can happen, but it requires a specific chain of events.
Take agricultural markets. Farmers will not sell corn from their silos for $4/bushel today if the price for delivery next year is $8/bushel, because they will make more profit by waiting and selling it at the higher price, even with storage and carrying costs. Therefore, the high futures price can cause less corn to be supplied today as farmers stock up in anticipation of next year's higher price.
Because many farmers will take advantage of this opportunity, today's price rises. At the same time, next year's price goes down because more corn has been stored for use at that time. The only difference in price will be the storage and carrying cost.
It is possible, though, that a bubble will emerge: Speculation on futures markets can hold too much corn off the market and raise price to an unsustainable level. However, the speculative bubble will pop when the silos can hold no more corn or when farmers start to unload their inventories. At that point the price of all the corn—both on the spot market and in the silos—plummets, and speculators lose their shirts.
The SPSI Guessed Wrong
One characteristic of a speculative bubble is the simultaneous increase in price and increase in inventories. This supports the theory that a speculative bubble is increasing today's price, but without rising inventories, there can be no link between higher futures prices and an impact on the current supply and current price. This is true for corn, wheat, and anything traded on futures markets, and it is true for petroleum as well.
In fact, the SPSI report makes dozens of references to this critical link between higher prices and growing inventories. Indeed, it is the primary evidence presented to support their finding of a speculative bubble.
But the SPSI misunderstood what was happening. This critical link between higher prices and higher inventories is also evidence of something else entirely: futures markets and speculators effectively anticipating tighter markets and rearranging consumption patterns to soften the blow on consumers. The price response when inventories are sold tells the story.
If, after a period of simultaneously rising prices and inventories, the inventories are reduced and the price holds steady or rises, then there was no speculative bubble after all. This pattern would instead be confirmation that futures markets anticipated higher prices but didn't cause higher prices. That is, in aggregate, traders on the futures markets correctly anticipated deteriorating supply and demand conditions, saved petroleum for the worse times, and provided additional barrels when they were most needed.
This is, in fact, exactly what we have seen. At the publication of the SPSI report, American petroleum inventories were at a record high of 347.5 million barrels while price was at $70 per barrel (not including the Strategic Petroleum Reserve). By the summer of 2008, these inventories had dropped below 300 million barrels while prices made their most dramatic rise in history. As the SPSI report made clear, speculation in futures markets cannot cause price increases when inventories are drawn down.
Having not seen the drawdown of inventories, the SPSI was itself only speculating as to the cause of the higher prices in 2006. It bet on a speculative bubble. We now know it was a harbinger of a tighter market.
Far from supporting a claim of speculator-caused petroleum price increases in 2008, the logic of the SPSI report combined with more recent evidence makes clear that futures markets built up oil supplies for the correctly anticipated rainy day. The over 50 million barrels that were, in effect, transferred from several years ago to this year saved the economy $3.5 billion.
On top of this, futures markets and speculators have other critical functions, such as providing liquidity and reducing risk for both consumers and producers.
More Oil, Not More Regulation
Based on a gross misunderstanding of how futures markets work and what they do, current proposals to hobble futures markets with additional regulation will harm both consumers and producers of petroleum and petroleum products. A better solution is to increase access to new energy sources. If new sources of oil are allowed to be used, futures markets and speculators will lower the future cost of oil, which will translate into lower fuel prices at the pump.
David W. Kreutzer, Ph.D., is Senior Policy Analyst for Energy Economics and Climate Change in the Center for Data Analysis at The Heritage Foundation.
Correct. The "Close The Enron Loophole" Act was achieved when the Farm Bill was signed. But it was toothless. It has no affect cause the language wasn't strong enough.
This shouldn't be a R vs D issue -- it should be an energy issue. But because politics is the last form of legalized blackmail in the US, Rs want drilling and D's want conservation.
This should be looked at in a bi-partisan way. A good analogy is a obese heat-attack patient. Two problems... heart attack and obesity. Both contributing factors to a grim future.
Again, it is excessive and manipulative speculation that can be controlled if CFTC just did their job!!! Nobody is asking for additional regulation of commodity trading -- only transparency into those large trades. It's for your own benefit.
Treat the heart attack first -- then the obesity. Stop excessive trading, then find new sources of oil through exploration.
These two sides can come together. They just won't.
This shouldn't be a R vs D issue -- it should be an energy issue. But because politics is the last form of legalized blackmail in the US, Rs want drilling and D's want conservation.
This should be looked at in a bi-partisan way. A good analogy is a obese heat-attack patient. Two problems... heart attack and obesity. Both contributing factors to a grim future.
Again, it is excessive and manipulative speculation that can be controlled if CFTC just did their job!!! Nobody is asking for additional regulation of commodity trading -- only transparency into those large trades. It's for your own benefit.
Treat the heart attack first -- then the obesity. Stop excessive trading, then find new sources of oil through exploration.
These two sides can come together. They just won't.
You're right about one thing. They should come together to pass a comprehensive energy bill that allows for nuclear plants, off shore drilling, drilling in ANWR, drilling for natural gas, wind power, clean coal, electric cars, natural gas cars, but if the democrats refuse to bring it to a vote because they know it will pass and they don't want it too, you think it's a good idea to take away the only leverage the republicans and some democrats too, have of forcing the issue? You pass the only piece of legislation the democrats are willing to put on the table besides their failed attempt at opening reserves, and you think we will ever get the other options put up for a vote? I think not.
Then tell me why the Republican's didn't bring a piece of exploration legislation to the table over the past 8 years. Currently there are more republicans in congress than dems and they still have Bush. So, why don't they bring that legislation to the table?
Also, keep in mind that of the natural off-shore drilling sites that we have, ANWR makes up 30%, the gulf 50%, and areas off the Atlantic 20%. I think the Republicans should at least present a piece of legislation that offered the Gulf regions (low hanging fruit), but it would take 10 years to get rigs built and operating before we would see relief. I'm NOT opposed to drilling off-shore -- I think it is part of the long term plan -- but there is currently nothing to vote for.
Back in March, the Alaskan Senators brought a bill to the floor that said if crude passed $125/barrel that they would open ANWR. AT the time it was $105/barrell and nobody could think it would get that high in a couple of months.
There is plenty of supply in the markets right now. None of the distributors on allocation and diesel is easy to come by. So why are the prices so high? Supply and demand... can't be. We are at an all time high in supply. Just ask the federal government.
Also, keep in mind that of the natural off-shore drilling sites that we have, ANWR makes up 30%, the gulf 50%, and areas off the Atlantic 20%. I think the Republicans should at least present a piece of legislation that offered the Gulf regions (low hanging fruit), but it would take 10 years to get rigs built and operating before we would see relief. I'm NOT opposed to drilling off-shore -- I think it is part of the long term plan -- but there is currently nothing to vote for.
Back in March, the Alaskan Senators brought a bill to the floor that said if crude passed $125/barrel that they would open ANWR. AT the time it was $105/barrell and nobody could think it would get that high in a couple of months.
There is plenty of supply in the markets right now. None of the distributors on allocation and diesel is easy to come by. So why are the prices so high? Supply and demand... can't be. We are at an all time high in supply. Just ask the federal government.
H
H2SNOW
ACCOUNT CLOSED
In the mean time get more bang for your buck @ http://doubledeucetransport.com
The only way to end overspeculation is to make it less likely there will be a world shortage of oil supply, ie DRILL & lessen demand. The only thing regulation on speculators will do is make it hard for oil users to predict their future cost. Oh, and guarantee a world shortage of oil.
Last edited:
Dude... you are smoking crack! In the last two weeks, oil has plummetted over $25 a barrell and it wasn't because we all of a sudden had a huge increase in supply.
TODAY, the chairman of OPEC came out and stated that supply is plentiful and that speculators are driving the price up. Are you telling me you know something more than the Chairman of OPEC -- whose responsibility of balancing out oil supply in the world is all wet behind the ears on this one? Really....???
The threat of S. 3268 in the Senate and the impending introduction of a house bill on anti-speculation has got a few wall street traders running scared. PLUS, the dollar is stregnthening; stocks are becoming less of a risk; and the mortgage crisis is forcing investors to liquidate their assets in order to cover risks on the financial markets. Thus, they are removing money from the long-term contracts in oil (the most profitable place to park money in 2007 and early 2008) and reinvesting in areas that need their money.
This isn't ALL about drilling off-shore. It's slightly more complicated than that... but oil speculators aren't going to get out of this without stinging their pocket books, and ultimately because this mess has been uncovered, prices will plummet.
And you, my friend, will be able to snowmobile more next year because prices will lower.
p.s. Can you please send me the number of the congressional bill that is offered today on off-shore drilling by the R's? I'd like to read it.
TODAY, the chairman of OPEC came out and stated that supply is plentiful and that speculators are driving the price up. Are you telling me you know something more than the Chairman of OPEC -- whose responsibility of balancing out oil supply in the world is all wet behind the ears on this one? Really....???
The threat of S. 3268 in the Senate and the impending introduction of a house bill on anti-speculation has got a few wall street traders running scared. PLUS, the dollar is stregnthening; stocks are becoming less of a risk; and the mortgage crisis is forcing investors to liquidate their assets in order to cover risks on the financial markets. Thus, they are removing money from the long-term contracts in oil (the most profitable place to park money in 2007 and early 2008) and reinvesting in areas that need their money.
This isn't ALL about drilling off-shore. It's slightly more complicated than that... but oil speculators aren't going to get out of this without stinging their pocket books, and ultimately because this mess has been uncovered, prices will plummet.
And you, my friend, will be able to snowmobile more next year because prices will lower.
p.s. Can you please send me the number of the congressional bill that is offered today on off-shore drilling by the R's? I'd like to read it.
In case you needed proof...
Oil falls to lowest level in nearly 3 months
Crude futures end the day more than $2.50 lower after OPEC president says there is adequate supply and prices are much too high.
Oil prices have fallen more than 15% since setting a record on July 11, but prices remain nearly 65% higher than a year ago.
NEW YORK (CNNMoney.com) -- Oil prices closed at the lowest level in nearly three months on Tuesday, after a selloff was sparked by comments from OPEC's president and sustained by ongoing worries about a slowdown in demand.
Light, sweet crude for September delivery slid $2.54 to end the day at $122.19 a barrel on the New York Mercantile Exchange, after having fallen as low as $120.42 earlier in the day.
Tuesday's price represents crude's lowest level since May 6, when prices settled at $121.84 a barrel.
The drop began after Chakib Khelil, president of the Organization of Petroleum Exporting Countries, told reporters in Jakarta, Indonesia, that the oil markets were being supplied with plenty of oil to meet demand, and that prices were being inflated by geopolitical tensions.
"Comments out of somebody like this definitely carry a lot of weight, especially with the market so nervous," said Neal Dingmann, senior energy analyst at Dahmlan Rose & Co.
The threat of a conflict between the West and Iran has raised major concerns about supply from the Middle East. However, there has been little saber rattling from either side since they met to discuss the oil producer's nuclear program over a week ago.
Khelil expressed little concern about supply disruption, saying "I think there is a good supply, there is a balance in the market," according to reports.
But he also didn't see a decline in demand - and that view appeared to run counter to the prevailing market sentiment.
"There's a sense that supplies are not as tight, [but] you can't run away from the fact that demand is getting crushed," said Phil Flynn, senior market analyst at Alaron Trading in Chicago.
One side effect of the decline was a surge in the dollar, which hit a one-month high versus the euro on Tuesday. Oil has been used as a hedge against the dollar in its recent decline.
"If the dollar continues to strengthen and the political situation [with Iran] improves, then the long-term prices will be about $78 [a barrel]," said Khelil, who is also Algeria's oil minister. He spoke to reporters while visiting Indonesia's energy minister.
Price drop: Crude prices have fallen by double digits over the past two weeks as oil investors worried that high prices for fuel made from crude oil have seriously damaged demand.
Average prices for regular gasoline in the U.S., the world's largest oil consumer, fell for the 12th straight day Tuesday, but remained near $4 a gallon - more than 36% higher than they were a year ago.
Oil has fallen 15% from its trading peak of $147.27 set July 11, though prices remained nearly 65% higher than they were 12 months ago.
"The market is more focused on the fundamental economics aspects than the geopolitical aspects," said Tom Orr, head of research at Weeden & Co.
Nigeria: Worries about a demand slide also overshadowed disruption in demand from Nigeria, Africa's largest oil producer.
Prices spiked in early trading after reports revealed that militants in Nigeria had damaged two oil pipelines operated by Royal Dutch Shell (RDS.A), but then retreated.
Rebel attacks on Nigeria's oil infrastructure have been a constant concern for oil investors, and a factor that some analysts believe is already included in the market price.
Speculation?: Oil investors, who have been blamed for pushing oil to record levels, have caught on to the trend of declining demand, according to one trader.
"Basically, as they [speculators] were the villains of pushing the market to extreme levels very fast... they're now doing the opposite," said James Cordier, founder of OptionSellers.com in Tampa, Fla., who referred to himself as a speculator.
In a report released Monday, the Commodity Futures Trading Commission said that, last week, more investment funds held "short" positions - betting that prices will continue to fall - than those that bet "long" - that prices will keep climbing.
It was the first time that short positions have outweighed long positions since the start of 2007, when oil prices began climbing, according to Nauman Barakat, energy trader at Macquarie Futures USA, in a research note.
Oil falls to lowest level in nearly 3 months
Crude futures end the day more than $2.50 lower after OPEC president says there is adequate supply and prices are much too high.
Oil prices have fallen more than 15% since setting a record on July 11, but prices remain nearly 65% higher than a year ago.
NEW YORK (CNNMoney.com) -- Oil prices closed at the lowest level in nearly three months on Tuesday, after a selloff was sparked by comments from OPEC's president and sustained by ongoing worries about a slowdown in demand.
Light, sweet crude for September delivery slid $2.54 to end the day at $122.19 a barrel on the New York Mercantile Exchange, after having fallen as low as $120.42 earlier in the day.
Tuesday's price represents crude's lowest level since May 6, when prices settled at $121.84 a barrel.
The drop began after Chakib Khelil, president of the Organization of Petroleum Exporting Countries, told reporters in Jakarta, Indonesia, that the oil markets were being supplied with plenty of oil to meet demand, and that prices were being inflated by geopolitical tensions.
"Comments out of somebody like this definitely carry a lot of weight, especially with the market so nervous," said Neal Dingmann, senior energy analyst at Dahmlan Rose & Co.
The threat of a conflict between the West and Iran has raised major concerns about supply from the Middle East. However, there has been little saber rattling from either side since they met to discuss the oil producer's nuclear program over a week ago.
Khelil expressed little concern about supply disruption, saying "I think there is a good supply, there is a balance in the market," according to reports.
But he also didn't see a decline in demand - and that view appeared to run counter to the prevailing market sentiment.
"There's a sense that supplies are not as tight, [but] you can't run away from the fact that demand is getting crushed," said Phil Flynn, senior market analyst at Alaron Trading in Chicago.
One side effect of the decline was a surge in the dollar, which hit a one-month high versus the euro on Tuesday. Oil has been used as a hedge against the dollar in its recent decline.
"If the dollar continues to strengthen and the political situation [with Iran] improves, then the long-term prices will be about $78 [a barrel]," said Khelil, who is also Algeria's oil minister. He spoke to reporters while visiting Indonesia's energy minister.
Price drop: Crude prices have fallen by double digits over the past two weeks as oil investors worried that high prices for fuel made from crude oil have seriously damaged demand.
Average prices for regular gasoline in the U.S., the world's largest oil consumer, fell for the 12th straight day Tuesday, but remained near $4 a gallon - more than 36% higher than they were a year ago.
Oil has fallen 15% from its trading peak of $147.27 set July 11, though prices remained nearly 65% higher than they were 12 months ago.
"The market is more focused on the fundamental economics aspects than the geopolitical aspects," said Tom Orr, head of research at Weeden & Co.
Nigeria: Worries about a demand slide also overshadowed disruption in demand from Nigeria, Africa's largest oil producer.
Prices spiked in early trading after reports revealed that militants in Nigeria had damaged two oil pipelines operated by Royal Dutch Shell (RDS.A), but then retreated.
Rebel attacks on Nigeria's oil infrastructure have been a constant concern for oil investors, and a factor that some analysts believe is already included in the market price.
Speculation?: Oil investors, who have been blamed for pushing oil to record levels, have caught on to the trend of declining demand, according to one trader.
"Basically, as they [speculators] were the villains of pushing the market to extreme levels very fast... they're now doing the opposite," said James Cordier, founder of OptionSellers.com in Tampa, Fla., who referred to himself as a speculator.
In a report released Monday, the Commodity Futures Trading Commission said that, last week, more investment funds held "short" positions - betting that prices will continue to fall - than those that bet "long" - that prices will keep climbing.
It was the first time that short positions have outweighed long positions since the start of 2007, when oil prices began climbing, according to Nauman Barakat, energy trader at Macquarie Futures USA, in a research note.
F
flying pig
Well-known member
any oil/gas coming outa canada isn't hurting u guys, all the bigger companies are US owned anyway. Just wish they'd do more here too cus all this sittin on my A$$ is getting old fast.
Similar threads
