If you put water, hot or cold, up your nose you can die from an aquatic
amoeba that eats your brain.
"(CNN) -- It's eerie but it's true: Three people have died this summer after
suffering rare infections from a waterborne amoeba that destroys the brain.
I've used just saline nose drops, in the past. It works well for cleaning the
nose out, too. It's a lot less painful than "Hoovering" the nose, I would
The doc gave me a steroid nose spray, today, and changed the antibiotic. This
one is weird; two the first day, then one a day for four. He said it says in
the system for ten days after. We'll see if it can knock this thing out.
Actually, most of the congestion and drip is gone. I still have sinus
pressure, something going on with the ears, and can't talk, very little drip
and I'm not coughing up anything.
The doc told me that, with the new antibiotic, it should be 50% better in four
or five days, or come back. I won't be back in town until next Saturday,
Which doesn't address the core issue, which is evidence to
support the claim being made that it's speculators that are keeping up
the price of oil.
It also goes directly against the theory that speculators are
deliberately manipulating the oil futures market. Here's the
data from the latest CFTC report from Mar 6:
# % Short # %
Producers/Users 256,000 51 16
330,000 52 21
Swap Dealers 125,000 17 8
324,000 29 20
Managed Money 255,000 85 16
46,000 32 3
Others req to report 141,000 60 9
114,000 47 7
eg large specs
Total contracts outstanding is 1,580,000 which represents about
20 days worth of worldwide production.
Long/Short is the number of contracts currently held
# is the number of traders reporting in that position category
% is the percentage of all the contracts outstanding that category
You tell me how from any of that you can deduce that speculators
are what is driving the price of oil.
So, what? False rumors have been knows to effect the
price of all kinds of things.
Unfortunately your definiton of speculating is not consistent with
any accepted definition. Neither the common usage nor the
usage as defined in the futures markets require that a speculator
have any inside information. Perhaps that's where you've gone wrong.
A speculator as pertinent to this discussion is simply someone who
takes a position in the futures market on the belief that the market
is going to move one way or the other so that they can profit. A
hedger is someone that enters the futures market to offset a
risk they have in their business or financial interest.
George thinks the price of soybeans is headed higher and wants
to profit from it. He goes long 5 November futures contracts,
covering 25,000 bushels.
Stan, a farmer in Illinois, is happy with the current price of
soybeans and doesn't want to risk it going down before he
harvests and sells his crop. He sells 5 Novemeber futures
Stan, the hedger has just transferred the risk to George,
the speculator. Nothing at all to do with inside information,
market manipulation or anything sinister.
Sure there is nervousness. If it's nervousness that's a problem,
then we might as well just shut down all the worlds finanacial
The obvious problem with the nervousness makes oil go up
theory is there are speculators and hedgers on BOTH
sides of the market. There are speculators long and speculators
short. So, for this "nervousness" to translate into marching prices
up, somehow the ones on the long side would have to be doing
one hell of a lot better job than the ones on the short side. And
while the prices are being worked up through nervousness, the
hedgers, ie oil producers, would have to decide not to take
advantage of those prices going higher, ie they would have to
sit on their hands instead of profitting by selling into the increased
prices that they as producers should know are not real and
sustainable. Instead, if at least some of them behave rationally,
then as the prices try to move higher, they have difficulty doing
so because the oil producers sell into the rally. You;d have
speculators buying and the oil producers, the really smart money
giving them all they want until they choke.
That was the whole point. lol
Actually, wrapping screwed it all up. If you want, here's the CFTC
Committment of Traders Report that shows the positions in all
the futures markets held by anyone that has more than the
reporting limit in number of contracts.
Light sweet crude is the oil contract of interest.
You've gotten Trader to admit that there has to be regulation on free
markets to prevent people from doing serious economic harm. Bravo, Han.
The numbers speak volumes about how different the current oil market is from
8 or 10 years ago:
<<In a five year period, Masters said the amount of money institutional
investors, hedge funds, and the big Wall Street banks had placed in the
commodities markets went from $13 billion to $300 billion. Last year, 27
barrels of crude were being traded every day on the New York Mercantile
Exchange for every one barrel of oil that was actually being consumed in the
United States.>> source:
Twenty-seven speculative transactions for every barrel of oil actually
consumed. Two thousand years ago the Romans realized the dangers of
speculation in "lifeline" commodities and made certain attempts to rig
market prices of grain punishable by death. In their time, the most
important commodity was bread. In ours, it's oil.
<<In its 2009 Trade and Development Report, the United Nations Conference on
Trade and Development (UNCTAD) contends that the massive in?ow of fund money
has caused commodity futures markets to fail the "ef?cient market"
hypothesis, as the purchase and sale of commodity futures by swap dealers
and index funds is entirely unrelated to market supply and demand
fundamentals, but depends rather on the funds' ability to attract
What they're saying is that the current speculative environment is now
entirely different than the one that originally evolved to limit risk to
farmers and other commodity producers. Now it's overrun with investors
looking to make a killing, not as a legitimate way to hedge risks. Where
does the money they make come from? Your wallet at the gas pump. The
higher speculators can drive prices for something vital to the economy (that
people can't put off buying for very long) the more money they can make.
When speculators make a killing, they can take those earnings and use them
to drive up prices of other commodities. even further.
I had to look up fungible, and I'm not sure I fully understand anything
more than a version of "easily substituted". Statistics are always
suspect, since we usually don't know all the premises and limitations to
the calculations. But bogus is too strong a word, IMO.
Nevertheless, since the US share of the world oil market is in the order
of 25%, substantially more than the ~4% as the 27-fold multiple of trades
over uses of 1 barrel suggests, the much repeated selling of that same
barrel of oil seems excessive. In the aggregate and on average such
trading cannot possibly reduce the average price of oil, since every
trade costs something.
So, yes the trading functions a bit to hedge and keep the prices in a
free market range, but that range is increased by the speculation.
And your definitive proof for that would be? Crickets.
Have you ever traded a single futures contract? I can just as
easily make a case that speculation decreases the range.
Again, there are speculators ON BOTH SIDES, LONG and
SHORT. You raised the example of rumors moving the
market. Let's say oil was at $100 and some rumor starts
moving it to $103. There are speculators that have been
around for decades. They know that most of these rumors
are just that, rumors. So, seeing it move up $3, they now
have an opportunity to short it, expecting it to move back
down. Later in the day, the price settles back to $102
and the speculator covers the short, taking his profit.
That action lessens the price move. It's also what a huge
amount of that volume is all about.
Regarding daily volume in futures, you've got it all wrong.
First, the CBS comparison of
futures volume versus US usage, as Kurt pointed out, is totally
bogus. Oil is a worldwide market, people use oil all over the
world. Participants in the US futures market are all over the
world and they will continue to be, unless we let you drive
them out. In which case, the business will just move to a
more friendly country where perhaps it will be less regulated.
How would you like that?
If you compare the futures volume to worldwide production,
about a weeks worth of contracts change hands each day.
So, for CBS, the correct ratio is not 27:1 but more like 7:1.
Now it's kind of odd that someone who AFAIK has never
traded a single futures contract of any kind would know
what the "right" volume should be. But tell us, what is
the right number from your magic ball?
What you have backwards here is that volume is a bad
thing. It's a very good thing that leads to efficient pricing
and liquidity. Let's say you need to sell 1000 shares of
a stock first thing Monday morning. Which market would
you rather that stock be in? The pink sheets of stocks
where if you're lucky, they might trade a few thousand
shares a day? Or would you want it to be one of the
NASDAQ stocks where they do millions of shares a day?
In the latter case, you could enter a market order, have
it filled in a second at a fair price. Try that in the other
market and see what happens. The more activity you
have in a trading environment, the better.
I am focusing on the example you give above. The rumor that ups the
price to $103, the speculator shorting it, and then the price falling
back to $102, from the initial $100. Seems to me there is a net increase
in this example and also a cost of trading. Or is all that trading back
and forth free? It may be a small amount, but there is a cost, and it
all adds up. Maybe that is why the price always goes up fast, and comes
And you're right, I am leery of sticking my neck out and going into
futures. So I know nothing about it ...
It's hard to estimate what effect speculation has on a market.
The speculator/business lock ratio on oil has flipped from 1:2
to 2:1 in the past ten years or so.
One thing to consider is the massive amounts of money available to
speculators, the various hedge instruments available to offset or
dampen losses, and tax strategies.
Most price-setting is determined by computer algorithms.
The Borg is here.
I traded various futures for a couple decades.
Nearly all "technical" (charting) combined with fundamentals.
Last time I traded oil I bought at 17 and sold at 19.
Last time I traded sugar - a couple years ago - I got burned for $4k,
and quit trading. Can't take the risk now that I'm retired.
And can't make too much sense of the markets.
Too much speculative swing due to massive speculator money.
But unless somebody can prove market manipulation/collusion, I look at
prices as *mostly* a result of simple supply/demand/perceptions.
You don't like 5 buck a gallon gas? Tough.
Who ever said low gas prices are a "right?"
Gas is 8 cents a gallon in Venezuela.
For most everybody else the way it works is you pay what the market
Same with gold. My wife won't buy gold jewelry (of course I agree
with her (-:)
I remember in the mid or late '70's sugar went sky high.
We just stopped buying sugar.
But oil is more necessary than gold or sugar for most people.
So they have to work harder to reduce demand.
That's the only solution.
I've got no sympathy at all for those driving relative gas-guzzlers
and whining about the price of gas.
The same with those who got over their head with housing.
What were they thinking?
Get used to life in the big city.
Drilling more won't help except marginally.
There's only so much oil, and that's the perception now.
Producers will always keep the price as high as the market will bear.
Right at the edge. Doesn't matter how much they drill.
They will keep the "oil shortage" perception strong, even when there's
a glut of current production.
Simple profit motive. That's business.
The common man's only option is to pay the market cost.
Or cut back on usage.
The biggest disappointment I have with government is they are too lame
to devise a coherent energy policy.
We need many more nukes. Decentralized and smaller.
That disaster in Japan - what was it, 5 reactors in one place? - just
shows how wrong that "strategy" is, and set nuke power back 20 years.
Sure, you can use NG for a while.
That will run out too.
My plan would be to get the French over here.
Tell them to think small plants, widely distributed.
New electric infrastructure to support electric car use.
Millions of jobs.
Then put them to work at it.
Oil prices would plunge when that was announced.
Won't happen until I'm crowned as Emperor.
And I won't hold my breath waiting for that.
It's not bogus, it's simply limited in scope. Not every statistic has to
look at the entire universe to make a valid point. The figures presented
here indicate that oil speculation has increased measurably and dramatically
in the last ten years. Or is that a point that's really in dispute? People
who speculate in commodities will assure you it's a wonderful thing that
helps everyone but it has some pretty serious downsides when things go
wrong. It's also now far less of a hedging risk tool than a way to make a
The refutation to Krugman's article on speculation made it pretty clear that
there is virtually no way to get to the numbers you want because of
record-keeping issues. How do you calculate the tendency of people to keep
their gas tanks as full as possible during gasoline shortages? There are
any number of places in the supply chain that can hold inventory that aren't
easily accounted for.
Besides, your beef isn't even with me, it's with these guys:
<<Dan Gilligan, President of the Petroleum Marketers Association said
"Approximately 60 to 70 percent of the oil contracts in the futures markets
are now held by speculative entities. Not by companies that need oil, not by
the airlines, not by the oil companies. But by investors that are looking to
make money from their speculative positions" . . . About the same time,
hedge fund manager Michael Masters reached the same conclusion. Masters'
expertise is in tracking the flow of investments into and out of financial
markets and he noticed huge amounts of money leaving stocks for commodities
and oil futures, most of it going into index funds, betting the price of oil
was going to go up.>> source:
(Kurt, this is not directed at you!) These are industry experts, not Usenet
armchair expert wannabees whose only proof consists of expletives and
insults and whose only expertise appears to be in saying "bullshit" to
anything they disagree with. Sorry if I don't believe someone saying
"bullshit" means anything to anyone other than the person that posted it is
intellectually bankrupt. The people that claim that there's no price rise
involved when speculators enter the market and drive up demand must have
slept through the supply and demand part of Econ 101. It seems they
especially don't understand price ratcheting and price stickiness if they
think the effect of speculation "balances out" in the long run. Look at the
speculation in homes. That ratcheted up home prices substantially and only
now are they beginning to return to reality.
Without true competition firms rarely lower prices even when production
costs decrease or demand drops. Cheaper production costs usually leads to
companies taking the difference as profit, and when demand slacks off they
are more likely to try to hold prices constant, while cutting production,
than to lower them. That's why Exxon & friends have posted record profits.
So dreaming that "drill, baby, drill" is going to counter decades of
increasing demand and ratcheting prices is pipe dreaming. Especially with a
cartel like OPEC that can simply cut back on production when they feel
they're selling their oil too cheaply.
Just those that try to make a universal point. So limited in scope as
to be valueless/
The figures presented
Nope, but the actual impact on the worldwide market and oil prices
is still not exactly settled.
Which is beside the point. All we are (supposedly) looking at is
oil deliveries versus oil contracts. All of that takes into account such
things because the deliveries don't get made if they aren't needed.
But oil futures should also have no real effect on oil prices unless
the contracts are actually being fulfilled. Fulfilling them is what
takes the oil of the market and is reflective of the demand. The really
interesting stat would be how well they reflect the spot demand or other
prices of the actual commodity.
That hasn't been the case. One of the more interesting (and
overlooked if not actively ignored issues) is that the oil companies
have very stable profit margins. So, they make pretty much the same %age
on gasoline no matter their costs are. But that also means that the
actual profit made fluctuates according to the price.
But to suggest not drilling won't have an impact on prices is
valid? How is it that the oil decisions of OPEC have such great impact,
but ours won't?
People thought cybersex was a safe alternative,
until patients started presenting with sexually
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