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  1. Standard member uzless
    The So Fist
    19 Jan '10 23:13
    Wonder why oil is up to 80 bux a barrel again?? Read on..
    ____________________________________________________

    Speculative money piles into oil

    By Shawn McCarthy
    Globe and Mail Update

    Wall Street in crosshairs for sharp rise in price that penalizes consumers, places powerful drag on economic recovery

    Already reviled for last year's financial meltdown, Wall Street is now being blamed for a sharp rise in oil prices that could undermine the fragile North American recovery.

    Buoyed by expectations of strong Asian growth, financial traders have piled into oil futures in the past several weeks, driving prices to 15-month highs. Analysts say the rising prices come despite continued weakness in U.S. demand, and pose new challenges to hard-pressed consumers.

    "Wall Street is certainly all bulled up," said Stephen Schork, an energy analyst who publishes a popular newsletter.

    "It's the global demand - you certainly can't look at demand in the United States and get excited about owning energy."

    Mr. Schork said crude prices broke through a narrow trading range above $82 (U.S.) last week and may climb further in a technical rally before running out of steam. But he added it is hard to forecast sustained increases, given the weakness of the developed-world economies.

    Oil's near-term future seems to be tied to China... It's no longer consumers in the U.S. who are driving global demand. Adam Sieminski, Deutsche Bank

    Crude prices on the New York Mercantile Exchange - which sets the benchmark for Canadian producers - seem to be defying grim economic news. On Friday, the U.S. government reported the economy shed 85,000 jobs in December, but after an initial selloff, oil prices rebounded to close 9 cents higher at $82.75 a barrel.

    After briefly dipping below $34 a barrel early last year, oil prices began climbing as traders took heart from the bottoming-out of the global recession and encouraging news from China and other developing markets. A slumping U.S. dollar and rising stock market were also seen as factors in the rise of crude and other commodity prices.

    By New Year's Day, crude prices had touched $81.

    Oil stock chart for body of story

    Still, speculative money kept piling into the market last week, as evidenced by the jump in non-commercial contracts on the futures markets reported by the Commodity Futures Trading Commission.

    "Almost all of that new buying is coming from investors," said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy risk management firm.

    Mr. Beutel noted that North American refiners continued to be squeezed by rising crude prices and weak demand, with inventory levels for both crude and petroleum products well above levels from last year. And he warned the investor-driven price increases will place a powerful drag on the economic recovery.

    "We know that every penny increase at the pump takes $4-million per day out of the Americans' pockets," he said. "Every time these prices are run up, it's the same as instituting a new tax on people. It's a subtle and insidious tax that nobody votes for; it's something that has been engineered on Wall Street."

    Deutsche Bank energy economist Adam Sieminski said plunging energy prices helped soften the recession's impact on consumers last year, and now the reverse is happening.

    "It's going to take money out of consumers' pocketbooks and that's going to be going to the oil industry, which doesn't need it as much as the auto industry does."

    But traders are clearly focused on solid growth from China and other emerging markets to justify their bullish view on crude prices.

    "Oil's near-term future seems to be tied to China," the Deutsche Bank economist said. "It's no longer consumers in the U.S. who are driving global demand."

    China's economy is estimated to have grown by 8.2 per cent in 2009, and is forecast to post 8.9-per-cent growth this year, according to The Economist Intelligence Unit, a division of The Economist magazine.

    The U.S., which accounts for a quarter of the world's oil consumption, saw its economy contract by an estimated 2.5 per cent last year, and is forecast to grow at a modest 2.7-per-cent clip this year, with employment lagging economic growth.
  2. 19 Jan '10 23:23
    the world needs to become a lot less dependent on oil - especially since much of it comes from places that harbor terrorists - but also because it's not good to be so dependent on a single source of fuel.

    I doubt there's much will to solve this problem legislatively, but perhaps these speculators can permanently push oil prices to levels that are high enough to stimulate private sector investors to put huge amounts of money towards alternative fuels and conservation technologies.
  3. Standard member Palynka
    Upward Spiral
    20 Jan '10 10:01
    http://redwing.hutman.net/~mreed/warriorshtm/klaxon.htm
  4. Standard member monster truck
    Walleye Guy
    20 Jan '10 14:48
    Originally posted by Melanerpes
    the world needs to become a lot less dependent on oil - especially since much of it comes from places that harbor terrorists - but also because it's not good to be so dependent on a single source of fuel.

    I doubt there's much will to solve this problem legislatively, but perhaps these speculators can permanently push oil prices to levels that are high ...[text shortened]... nvestors to put huge amounts of money towards alternative fuels and conservation technologies.
    Burning fossil fuels is bad, M'Kay?
    For a variety of reasons.
    Pollution, dependency, non-renewable to name a few.
  5. 20 Jan '10 16:26
    Someone says it is Wall Street's fault so it is true. If $80 were an inappropriate price don't you think people would sell? or new supppliers would enter? or suppliers would increase production/ lift quotas? or people would go to substitutes? or people would demand less?
    I think that the idea that Wall Street some how causes the average person to suffer is just an inaccurate prejudice and jealous joke and should be considered as reasonable as the Klu Klux Klan and other similarly open minded oraganizations
  6. 20 Jan '10 19:34
    Originally posted by Melanerpes
    the world needs to become a lot less dependent on oil - especially since much of it comes from places that harbor terrorists - but also because it's not good to be so dependent on a single source of fuel.

    I doubt there's much will to solve this problem legislatively, but perhaps these speculators can permanently push oil prices to levels that are high ...[text shortened]... nvestors to put huge amounts of money towards alternative fuels and conservation technologies.
    So what is being done to remedy this currently? What should be done?
  7. 20 Jan '10 19:35 / 2 edits
    Originally posted by quackquack
    Someone says it is Wall Street's fault so it is true. If $80 were an inappropriate price don't you think people would sell? or new supppliers would enter? or suppliers would increase production/ lift quotas? or people would go to substitutes? or people would demand less?
    I think that the idea that Wall Street some how causes the average person to suffer ...[text shortened]... e considered as reasonable as the Klu Klux Klan and other similarly open minded oraganizations
    It is no more Wall Streets fault than the credit crisis. Like the credit crisis, Wall Street will find a way to make money off of "toxic assets" that lenders were forced to give the public due to government intervention. In short, wall street will find a way to make the mud off your shoe if need be. That is what they do.

    The bottom line is that the energy policy of the US is horrible and has been and will continue to be until the powers that be no longer allow themselves to be baught off by big oil. Being reliant on foriegn oil has so many down sides, such as feeling the need to have troops in the Middle East and giving our wealth to many regimes that hate the US and being at the mercy of OPEC, that issues like carbon emissions seem to pale in comparison. What we need to do is turn to natural gas as well as oil reserves in the US while we begin to invest in such alternatives as nuclear power. My guess is, however, we will continue down the same road that led us into Iraq and why we remain there.
  8. Standard member sh76
    Civis Americanus Sum
    20 Jan '10 22:09 / 1 edit
    As tedious as uzless conspiracy theories sometimes are, on this issue I believe he speaks the truth.

    The enormous spike in oil prices in 2007 had to have been mostly caused by speculation. The current mini-spike is probably no different.

    I don't blame Wall Street. A private investor should not have to worry about geopolitical consequences when trying to make money. But regulations could make it a bit more difficult for speculators to drive up the prices of staple commodities.

    Still...

    If it facilitates the development of new energy technology and facilitates conservation (why every housewife suddenly needed a Suburban in 2003 is beyond me), maybe it's good in the long run.

    The speculators who drive up the price are going to take a bath when the next bubble bursts in any case.
  9. Standard member sh76
    Civis Americanus Sum
    20 Jan '10 22:13 / 1 edit
    Originally posted by whodey
    What should be done?
    The simplest thing would be to outlaw futures trading on staple commodities unless you're a supplier.
























    Damn; do I sound like a Communist?








    Somebody shoot me.
  10. 20 Jan '10 22:51 / 2 edits
    Originally posted by sh76
    As tedious as uzless conspiracy theories sometimes are, on this issue I believe he speaks the truth.

    The enormous spike in oil prices in 2007 had to have been mostly caused by speculation. The current mini-spike is probably no different.

    I don't blame Wall Street. A private investor should not have to worry about geopolitical consequences when trying to m ators who drive up the price are going to take a bath when the next bubble bursts in any case.
    I think the main thing that drives speculation is the following mentality:

    Many speculators probably know full well that the item in question is overpriced. But they also see that the price has a lot of upward momentum - and history shows that irrational momentum can go on for some time before the crash occurs. The idea is to jump in, ride the wave higher, and then jump out at the first sign of a drop. And most of the speculators are able to get away with it. That's why there's so much of it.

    As long as people are willing to play this "momentum" game, this can go on for quite some time. It becomes like the Roadrunner and the Coyote - where the Coyote runs off the cliff and stays in mid-air.....until he finally looks down. At some point, something eventually happens and too many investors look down.....









    Bath time!!!!!