Post by warren on Jul 9, 2011 15:18:04 GMT -5
Oil Foolishness -- Is THIS the Market We Want?
Posted: 7/8/11
The last two days of the oil trade have proven one thing -- just how ridiculously and financially manipulated the oil price, and the price you and I pay at the gas pump, continue to be.
Yesterday, with absolutely nothing going on from a supply or demand standpoint, with nothing happening geopolitically in the MidEast or in North Africa, with no OPEC meeting to knot our fingers over, with no oil company earnings or IEA predictions or SPR releases to consider -- with NONE of that on the radar on a 92 degree day in New York City and most hedge fund managers at the beach or their Hamptons estate during this short week, Brent crude oil rallied more than FOUR dollars.
HUH? What the heck was that about?
Well, two things did happen -- one, Morgan Stanley and Goldman Sachs both reiterated their bullish conviction calls on oil for the second half of 2011, placing targets more than 15 dollars higher than are currently traded and the stock market did stage a nearly 100 point rally in the Dow Industrials.
That's it -- oil was off to the races as money from investors and traders took the Investment banks' advice and bought oil, while other self-generated algorithmic trade systems that dominate our commodity markets added to the buying frenzy by ticking prices up based on the stock rally.
On CNBC, I called this a "bull trap" -- just wait for a day when the stock market is down, I said, and oil will retreat almost as quickly as it progressed.
You didn't have to wait long. Today, on the back of a dismal jobs number increase of only 16,000, the stock market opened down more than a 100 points.
And oil's price? Again, with no peace breaking out in Libya, no new billion barrel oil find, no marginal supply increase or massively dropping demand figures emerging from China or elsewhere, West Texas Crude on the New York Mercantile Exchange is down almost three dollars.
Here's the point: These big swinging prices MEAN something to people -- to the prices they pay to heat their homes, to run their businesses and to fill up their cars. We have placed virtual control of the pricing of this vital resource in the hands of the micro traders and black boxes of the hedge fund world. Investors and traders have become the overwhelming influence and the arbiters of what we pay for energy.
Is this the market we want?
Posted: 7/8/11
The last two days of the oil trade have proven one thing -- just how ridiculously and financially manipulated the oil price, and the price you and I pay at the gas pump, continue to be.
Yesterday, with absolutely nothing going on from a supply or demand standpoint, with nothing happening geopolitically in the MidEast or in North Africa, with no OPEC meeting to knot our fingers over, with no oil company earnings or IEA predictions or SPR releases to consider -- with NONE of that on the radar on a 92 degree day in New York City and most hedge fund managers at the beach or their Hamptons estate during this short week, Brent crude oil rallied more than FOUR dollars.
HUH? What the heck was that about?
Well, two things did happen -- one, Morgan Stanley and Goldman Sachs both reiterated their bullish conviction calls on oil for the second half of 2011, placing targets more than 15 dollars higher than are currently traded and the stock market did stage a nearly 100 point rally in the Dow Industrials.
That's it -- oil was off to the races as money from investors and traders took the Investment banks' advice and bought oil, while other self-generated algorithmic trade systems that dominate our commodity markets added to the buying frenzy by ticking prices up based on the stock rally.
On CNBC, I called this a "bull trap" -- just wait for a day when the stock market is down, I said, and oil will retreat almost as quickly as it progressed.
You didn't have to wait long. Today, on the back of a dismal jobs number increase of only 16,000, the stock market opened down more than a 100 points.
And oil's price? Again, with no peace breaking out in Libya, no new billion barrel oil find, no marginal supply increase or massively dropping demand figures emerging from China or elsewhere, West Texas Crude on the New York Mercantile Exchange is down almost three dollars.
Here's the point: These big swinging prices MEAN something to people -- to the prices they pay to heat their homes, to run their businesses and to fill up their cars. We have placed virtual control of the pricing of this vital resource in the hands of the micro traders and black boxes of the hedge fund world. Investors and traders have become the overwhelming influence and the arbiters of what we pay for energy.
Is this the market we want?