.

By David Cho
Washington Post Staff Writer
Friday, June 6, 2008; Page A01

Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.

The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.

The CFTC has also waived regulations over the past decade on U.S. investors who trade commodities on some overseas markets, freeing those investors to accumulate large quantities of the future oil supply by making purchases on lightly regulated foreign exchanges.

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/05/AR2008060504322.html

ferfux Wrote:
-------------------------------------------------------
> .
>
> By David Cho
> Washington Post Staff Writer
> Friday, June 6, 2008; Page A01
>
> Hedge funds and big Wall Street banks are taking
> advantage of loopholes in federal trading limits
> to buy massive amounts of oil contracts, according
> to a growing number of lawmakers and prominent
> investors, who blame the practice for helping to
> push oil prices to record highs.
>
> The federal agency that oversees oil trading, the
> Commodity Futures Trading Commission, has exempted
> these firms from rules that limit speculative
> buying, a prerogative traditionally reserved for
> airlines and trucking companies that need to lock
> in future fuel costs.
>
> The CFTC has also waived regulations over the past
> decade on U.S. investors who trade commodities on
> some overseas markets, freeing those investors to
> accumulate large quantities of the future oil
> supply by making purchases on lightly regulated
> foreign exchanges.
>
> http://www.washingtonpost.com/wp-dyn/content/artic
> le/2008/06/05/AR2008060504322.html


AKA - It's Bush's fault.

I was right about this. These guys are pulling the same shit they did with the housing market. When are you Bush apologists going to learn? The Wall Street types are buying up futures contracts and then sticking the American people with the bill. I guarantee you when the market collapses (in January 2009, if Obama is elected. God knows when if McCain gets elected) all the Wall Street types will be doing back-door deals with the Fed to bail their asses out for the contracts they got stuck holding.

Guys it is not that simple. When you refer to "those guys"-aka hedge and pension funds, you are referring to the retail investor who has their 401k or has invested in an ETF.

Joe Investor is now more sophisticated and wants to own some metals and some commodities-these products are now more readily available via ETFs and thru lower minimums on hedge fund investments.

This problem is not an easy one to fix.

street analysis Wrote:
-------------------------------------------------------
> Guys it is not that simple. When you refer to
> "those guys"-aka hedge and pension funds, you are
> referring to the retail investor who has their
> 401k or has invested in an ETF.
>
> Joe Investor is now more sophisticated and wants
> to own some metals and some commodities-these
> products are now more readily available via ETFs
> and thru lower minimums on hedge fund
> investments.
>
> This problem is not an easy one to fix.


As someone who has some knowledge of this area, "Joe Investor" has no business investing in commodities futures. It is a high risk gamble and most individual investors don't have the knowledge, sophistication or capital to do it without losing their shirts. I've seen people in their 60s blow their retirements on this stuff. CFTC should absolutely clamp down on this crap...as they have done in the past!

Oh ok Washingtone-why don't you run for president and tell the average investor what they can own and what they can't. Why don't you dictate everyone's asset allocation. Gold, Silver, currencies, when used correctly can hedge a portfolio-which means LESS risk-not more.

You need an education on investing, pal.

tell that to gold investors Wrote:
-------------------------------------------------------
> Oh ok Washingtone-why don't you run for president
> and tell the average investor what they can own
> and what they can't. Why don't you dictate
> everyone's asset allocation. Gold, Silver,
> currencies, when used correctly can hedge a
> portfolio-which means LESS risk-not more.
>
> You need an education on investing, pal.


Education, eh? Here's an education for you.

The Hunt brothers were fined by the CFTC for this kind of speculation in the Silver market in the 1970s...

http://en.wikipedia.org/wiki/Hunt_brothers#Silver_Thursday

This has nothing to do with asset allocation. It has to do with a few groups being allowed to game a market at the expense of others. Conservatives like yourself scream bloody murder when George Soros or Hillary Clinton does it, but you'd better not point it out when oil speculators do it!!!

WT-

You are so wrong. Which hedge fund or fund manager is engaging in illegal conduct? Could you please point them out to the group?

GLD-an ETF managed by SPDR is one of the biggest holders of gold in the world-more than most countries. $16 billion to be exact. Trades on NYSE, is liquid, cheap and is a pure play on gold-no futures. Joe Investor can now own pure gold without ownership, insurance, storage costs. They pay brokerage commissions to buy and .40% per year for management fees.

Returns by the way are not to shabby either. If you were smart enough to get in on this in November 2004-you have annualized returns of 24%. Beats the heck out of your Vanguard S&P 500 index fund, huh?

But I guess because you don't like this type of investing-people can't trade this anymore. Over 6 million shares trade daily so I guess a few people are interested in this type of asset class.

ferfux Wrote:
-------------------------------------------------------
> The CFTC has also waived regulations over the past
> decade on U.S. investors who trade commodities on
> some overseas markets, freeing those investors to
> accumulate large quantities of the future oil
> supply by making purchases on lightly regulated
> foreign exchanges.


WashingToneLocian Wrote:
-------------------------------------------------------
> AKA - It's Bush's fault.


hmm... 10 years... that would put it in... bush's term i guess. -_-


"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."

paranoid and stupid Wrote:
-------------------------------------------------------
> WT-
>
> You are so wrong. Which hedge fund or fund
> manager is engaging in illegal conduct? Could you
> please point them out to the group?
>
> GLD-an ETF managed by SPDR is one of the biggest
> holders of gold in the world-more than most
> countries. $16 billion to be exact. Trades on
> NYSE, is liquid, cheap and is a pure play on
> gold-no futures. Joe Investor can now own pure
> gold without ownership, insurance, storage costs.
> They pay brokerage commissions to buy and .40% per
> year for management fees.
>
> Returns by the way are not to shabby either. If
> you were smart enough to get in on this in
> November 2004-you have annualized returns of 24%.
> Beats the heck out of your Vanguard S&P 500 index
> fund, huh?
>
> But I guess because you don't like this type of
> investing-people can't trade this anymore. Over 6
> million shares trade daily so I guess a few people
> are interested in this type of asset class.


We are talking about manipulation of the oil market by a few speculators, dumbass. And individuals have no business buying commodities futures contracts! It is a high risk venture. If people want to buy gold, I could care less. I'm talking about futures contracts! Not bundled securities!

Gravis Wrote:
-------------------------------------------------------
> ferfux Wrote:
> --------------------------------------------------
> -----
> > The CFTC has also waived regulations over the
> past
> > decade on U.S. investors who trade commodities
> on
> > some overseas markets, freeing those investors
> to
> > accumulate large quantities of the future oil
> > supply by making purchases on lightly regulated
> > foreign exchanges.
>
>
> WashingToneLocian Wrote:
> --------------------------------------------------
> -----
> > AKA - It's Bush's fault.
>
>
> hmm... 10 years... that would put it in... bush's
> term i guess. -_-


The past decade. Bush has been in office for eight years. Decade is a general approximation. The President appoints the CFTC Commissioners, the way he appoints the FCC Commissioners (we've seen how well that has done over the past "decade.")

hmmm according to CNN and Washingtonpost buyers on wall street just sent the price of oil to 139.00 because GOLDMAN SACHS SPECULATED THT IT WOULD REACH 150 by July 4th!!!!!!!!!!!!

WTF? Just cuz someone says hey, "this price might go as high as we say it might, it then GOES THAT HIGH?" Sounds like a self fullfilling prophecy! Fuckin, Hey Goldman Sach's of shit why dont you speculate that oil might go DOWN and shit on your heads from a great hieght? Hmmmmmmmmmmmmmmmmmmmmmmmm?

You are correct these "oil speculators" are terrible people. Particularly SouthWest Airlines for wisely choosing to hedge 70% of their annual fuel costs. This "illegal"-according to WT act saved this company over $700 million in fuel costs last year. I guess the shareholders are grateful. While everyone else is paying $130 per barrel-SouthWest locked in a price of $51.

What an awful act-bordering on terrorism. How dare they destabalize our economy like that?

BTW, a number of Wall Street analysts are predicting that this airlines will be one of the few that does not file bankruptcy in the next year-avoided by this hedging decision.

oil hedging is bad-I guess Wrote:
-------------------------------------------------------
> You are correct these "oil speculators" are
> terrible people. Particularly SouthWest Airlines
> for wisely choosing to hedge 70% of their annual
> fuel costs. This "illegal"-according to WT act
> saved this company over $700 million in fuel costs
> last year. I guess the shareholders are grateful.
> While everyone else is paying $130 per
> barrel-SouthWest locked in a price of $51.
>
> What an awful act-bordering on terrorism. How
> dare they destabalize our economy like that?
>
> BTW, a number of Wall Street analysts are
> predicting that this airlines will be one of the
> few that does not file bankruptcy in the next
> year-avoided by this hedging decision.


if you read the article its not the airlines or companies that USE the oil that aare feeding the buying frenzy its speculators who are bundling stocks that are driving it up. The loopholes, as you pointed out are there to help companies that USE that particular product. Thanks for NOT reading and comprehending the story.

What the hell do you think hedging is-idiot?? Do you think SouthWest bought millions of barrels of oil and stored it in the desert?

They bought OIL FUTURES-the airlines are probably one of the largest holders-them and the oil/gas guys. That is what drives up the price idiot-the futures market. The farther out contracts that are traded the higher the prices go because that is what the "market" is predicting. Futures activity drives the price of oil-

oil hedging is bad-I guess Wrote:
-------------------------------------------------------
> You are correct these "oil speculators" are
> terrible people. Particularly SouthWest Airlines
> for wisely choosing to hedge 70% of their annual
> fuel costs. This "illegal"-according to WT act
> saved this company over $700 million in fuel costs
> last year. I guess the shareholders are grateful.
> While everyone else is paying $130 per
> barrel-SouthWest locked in a price of $51.
>
> What an awful act-bordering on terrorism. How
> dare they destabalize our economy like that?
>
> BTW, a number of Wall Street analysts are
> predicting that this airlines will be one of the
> few that does not file bankruptcy in the next
> year-avoided by this hedging decision.


Jesus! Would you read the original article? It says the loophole was designed for airlines but is being taken advantage of by market speculators, hence the rise in prices. If it weren't for the Wall Street speculators, Southwest, etc, wouldn't have to risk so much of futures contracts.

Also, the hyperbole is yours. I'm not saying this is illegal. I'm saying the CFTC isn't doing its job. The CFTC needs to close the loophole for groups other than airlines or trucking companies. It is obviously being abused at the expense of the country.

waste of time Wrote:
-------------------------------------------------------
> What the hell do you think hedging is-idiot?? Do
> you think SouthWest bought millions of barrels of
> oil and stored it in the desert?
>
> They bought OIL FUTURES-the airlines are probably
> one of the largest holders-them and the oil/gas
> guys. That is what drives up the price idiot-the
> futures market. The farther out contracts that are
> traded the higher the prices go because that is
> what the "market" is predicting. Futures activity
> drives the price of oil-


Read the fucking article! Good God you are fucking stupid!!

So let' see last month Congress paraded the oil executives as the evildoers and this week it is the hedge fund and pension fund managers.

Supply vs. demand-halfwits...

In the US crude inventories now total less than 307 million barrels-down 36 million barrels year over year and 1.5 million barrels under the 5 year average.

Crude oil imports are averaging 9.5 million b/d-down 892,000 b/d year over year.

Non-OPEC producers (Brazil, Mexico, Former SU, Canada) show production lower by an aggregate 944,00 b/d or lower 3/3% year over year.

Norweigian North Sea production estimates that April production was 320,000 b/d lower year to year.

yada yada yada.....lower inventory equals higher prices. We will hit $150 by end of June which will be $5 per gallon folks.

The hedgers are just one step ahead of everyone else. That is why they call it the smart money.

As fast as the "speculators" drive up the price, they will bring it down twice as fast. It's a cycle.
I can remember not too far back when it went to 12usd/b and people were losing their shirts, including BIG OIL.

It'll happen again as soon as we can drill our own.

Don't take it from me. Listen to Peter Beutel. When I worked in radio in the late 80s and early 90s, this guy was THE guy to talk to about the oil markets.

http://www.reuters.com/article/reutersEdge/idUSN3036922920080530

He is predicting a collapse in the oil market, which take down all the "sophisticated investors" you guys like to talk about.

waste of time Wrote:
-------------------------------------------------------
> What the hell do you think hedging is-idiot?? Do
> you think SouthWest bought millions of barrels of
> oil and stored it in the desert?
>
> They bought OIL FUTURES-the airlines are probably
> one of the largest holders-them and the oil/gas
> guys. That is what drives up the price idiot-the
> futures market. The farther out contracts that are
> traded the higher the prices go because that is
> what the "market" is predicting. Futures activity
> drives the price of oil-

Speculator Wrote:
-------------------------------------------------------
> As fast as the "speculators" drive up the price,
> they will bring it down twice as fast. It's a
> cycle.
> I can remember not too far back when it went to
> 12usd/b and people were losing their shirts,
> including BIG OIL.
>
> It'll happen again as soon as we can drill our
> own.


No it won't. THe US doesn't have enough oil to drill and we aren't even getting the 34 billion barrels we already have access to in the Gulf. The oil companies are playing the public for fools, just like the finance industry. If we do open off shore, it's unlikely California will open their coast and then we only add an estimate of about 8 billion barrels. Whoopee shit.

Drill what they already have access to and stfu about effing up more places. If they open off shore drilling, they will RAISE prices, because then they'll have to build new off-shore drilling rigs and platforms. Plus, it'll take another 10 years for them to get any oil.

paranoid and stupid Wrote:
-> GLD-an ETF managed by SPDR is one of the biggest
> holders of gold in the world-more than most
> countries. $16 billion to be exact. Trades on
> NYSE, is liquid, cheap and is a pure play on
> gold-no futures. Joe Investor can now own pure
> gold without ownership, insurance, storage costs.

That kind of scares me. I always wonder if you're buying shares of fantasy gold. I know nothing about it, just saying, it sounds like Bernie Madoff's side business. I'd rather own shares of a gold mining company than SPDR.