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Oppenheimer's Fadel Gheit Accuses Goldman Of Manipulating Crude Market

Tyler Durden's picture





 

It is no secret that Zero Hedge follows every utterance by Goldman Sachs (Morgan Stanley, not so much - it is sad just how irrelevant MS has become when it comes to swaying any opinion at all) as pertains to the firm's outlook on various commodities, simply because by the very nature of the firm's trading operations, whereby its prop desk (yes, Goldman's prop desk is alive and well) controls a substantial amount of the actual commodity outstanding (in either paper or physical form) and then advises clients to do the opposite of what the firm itself is doing. In essence: using its economy of scale (or monopoly, however one wishes to define it), Goldman can sway the market this way and that with one simple "client" note. The recent fiasco whereby Goldman downgraded Brent on April 12 only to upgrade it two days ago, using the very same assumptions, is nothing more than just the latest example of what we have claimed over and over is outright market manipulation. Today, we find we are not alone after Oppenheimer's Fadel Gheit accused the firm of precisely the same thing on Bloomberg TV: "Unfortunately, without repeating the names of the brokers, everybody
knows who the usual suspects are. These are the people in 2008 that were
making a bet on $200 oil. This is another form of market manipulation in my view
. Whether or not they are influencing the market and manipulation could be
a stronger word, but they are influencing the market
. They are doing
things that could be beneficial to them but harmful to the rest of us.
That is where government comes in and says stop, enough. You have a
Ferrari or a Maserati and can go 120 mph, but guess what? Those of us
who can only go 60 miles per hour will be pulverized. That is where the
government has to come in and say there is a speed limit here, but that
is not happening." Of course, if Oppenheimer was large enough and influential enough to do what Goldman does, we are 105% confident Fadel would be singing a totally different tune.

More courtesy of Bloomberg TV:

Gheit on Morgan Stanley and Goldman Sachs changing their positions on oil yesterday:

"Unfortunately, without repeating the names of the brokers, everybody knows who the usual suspects are. These are the people in 2008 that were making a bet on $200 oil."

"This is another form of market manipulation in my view. It is in another form of basically pushing the envelope. What you are saying or doing is not illegal, but they are allowed to do it. The government has a responsibility to slap them hard."

Gheit on whether he thinks the notes out of Morgan Stanley and Goldman Sachs are market manipulation:

"The interpretation will be left to the market. It is a self-fulfilling prophecy. They can invent reasons why oil prices go to $130 or $150, but history has shown that these people are able to move markets. It is not Exxon or BP or Shell that moves the oil markets. It is the financial players. It is the Goldman Sachs, the Morgan Stanley, all of the other guys. It is a shame on the government that allows them to get away with that."

"It is not illegal. All banks need to make a profit. The M&A business is not doing too well. Therefore, they need to improve their profit outlook and commodities has been the area where they make a lot of money. Commodity speculation is now a big driving force in Wall Street. Everybody wants to do it. It is not illegal, but it is not well-supervised. It is like speeding over the speed limit. If a cop doesn't stop you, you get away with it and you continue to do it. [The CFDC] has absolutely done nothing. They talked about this for three or four years. Nothing happens. Nothing changes and I think nothing will change. Any changes will be cosmetic because financial institutions have a lot of clout and the financial lobby is very strong. Much stronger than the oil lobby."

On whether he thinks Goldman Sachs is manipulating the price of oil:

"I am saying it is very easy to scream fire in a crowded place, everyone will run. All I am saying is that there has to be rules and the only way is to position them. You cannot allow a financial institution to take a huge chunk of the oil market and that's a pure speculation…Why did they control hundreds of millions of barrels of oil if they cannot refine or mine. Because it is because it is legal and they can get away with it. As long as they make a profit, that is fine. Basically, the consumer will pay the price. The economy will slow down because of the few that will make a huge amount of profits."

"All I can tell you is that when the big financial players, whether it is the buy side or the sell side, when Warren Buffet takes a position of Company X, the stock will move up. Whether or not they are influencing the market and manipulation could be a stronger word, but they are influencing the market. They are doing things that could be beneficial to them but harmful to the rest of us. That is where government comes in and says stop, enough. You have a Ferrari or a Maserati and can go 120 mph, but guess what? Those of us who can only go 60 miles per hour will be pulverized. That is where the government has to come in and say there is a speed limit here, but that is not happening."

On whether he is surprised at today's inventory figures:

"You have to take into account that we see these numbers don't mean much unless they are consistent. We have not seen a trend yet, but definitely higher gasoline prices at the pump will curtail driving. By how much, we do not know. Some companies say as much as a 5% drop from last month. We're entering the summer driving season so things could change. Gasoline prices are retreating, but obviously not by as much as they surged in the last four to five weeks. It is still in flux. We don't know exactly which way it will go. I can tell you one thing -- don't expect much lower gasoline prices, especially oil prices."

On demand destruction and prices coming down over the next couple of months:

"Prices will come down and the next couple of months for a couple of reasons. Oil prices are down by almost15% from more than three weeks ago. That is not reflected fully in the price of gasoline. It will happen, but it is a question of when. The mitigating factor here is how strong it will be the driving season this time around. We are still very early. Next week compared to one year ago, we will see where we are. Right now, it is a balanced picture. There is demand destruction on one hand, but there is also the beginning of the heavy driving season."

 


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Wed, 05/25/2011 - 13:52 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Too funny.

That is where government comes in and says stop, enough.

That's like asking your right hand to amputate your left hand. Not going to happen when they both share the same brain and control system. It will take a third person or entity to amputate the gangrenous Goldman Sachs and company.

Wed, 05/25/2011 - 14:01 | Link to Comment Votewithabullet
Votewithabullet's picture

OOH OOH I'm going to get a hugh photo of Muhammed and drape it over 85 Broad and blame it on lloyd. sign it turk 182

Wed, 05/25/2011 - 15:10 | Link to Comment Texas Gunslinger
Texas Gunslinger's picture

 

......is nothing more than just the latest example of what we have claimed over and over is outright market manipulation.....

Not so fast.  ZeroHedge and its readers have routinely mocked the idea that speculators are to blame for the dramatic movements in commodity prices. WIth commodities, the theme here has always been the same:  Bernanke's fault - and anyone who said otherwise was ridiculed. Now, suddenly, manipulation is to blame?

If we are now accepting the fact that speculators (GSCI) are to blame, does this mean ZeroHedge disagrees with Rick Santelli's claim that the 2008 oil run was NOT the result of manipulation and speculators? This article clearly pins the blame on GSCI, yet Santelli has repeatedly dismissed the role of speculators in the oil market, and their ability to jack prices away from true supply/demand equilibrium.  According to CME's favorite talking head, contracts wouldn't continue to roll forward if the implied demand wasn't true. So who's right, Santelli or ZeroHedge?

I'm not quite sure why Santelli is so revered by ZeroHedge readers, especially since he's spent the past 30 years at the CME - the very same organization that hiked margin requirements 57 times this year on silver.  Does anyone think that maybe, just perhaps, a 30 year career with the CME might distort one's credibility when discussing the role of speculators in the market?

lol

 

Wed, 05/25/2011 - 13:58 | Link to Comment jus_lite_reading
jus_lite_reading's picture

"Of course, if Oppenheimer was large enough and influential enough to do what Goldman does, we are 105% confident Fidel would be singing a totally different tune."

Truth in jest. Remember money is the root of many of man's evils. Once a person is able to have a moment of clarity and realize that money is only a limited protection but meaningless without happiness... he can be free. As you said if the tables were turned he would sing another tune.....

Wed, 05/25/2011 - 14:28 | Link to Comment Temporalist
Temporalist's picture

It is not money that is the root of evil it is the lust of money.

 

"The original biblical quotation means "the love of money is the root of all evil" (or all kinds of evil), and has been translated into English as such since the King James Version.[1] However it has frequently been mistranslated as "money is the root of all evil", and the latter has become well-known misquotation."

http://en.wikipedia.org/wiki/Radix_malorum_est_cupiditas

Wed, 05/25/2011 - 17:01 | Link to Comment jus_lite_reading
jus_lite_reading's picture

I stand corrected then. You are correct... its the love of money that is the evil. And that love of money is in modern terms 'greed'... its game over for them. I am out early and all in gold/silver. I trade, invest or speculate no longer. I see no reason to get caught perpetuating this last ponzi called the global stock markets... a rigged casino...

Wed, 05/25/2011 - 14:17 | Link to Comment Ruffcut
Ruffcut's picture

He is bitching and whinning about "where's the "me too"".

The fund contributions are down, their redemptions are up and they are scratching for bonuses. 

Cry-fucking babies. Cry me a river, for they would be robbing at will, if given half a chance..

Wed, 05/25/2011 - 13:54 | Link to Comment Orly
Orly's picture

Now, the cannibals start eating themselves.  This should get very interesting...

Wed, 05/25/2011 - 14:04 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Actually they have been living off of us and will continue until the world ends. Which is as soon as FUKKYOUSHIMA BLOWS!!!

http://fiatsfire.blogspot.com/2011/05/wait-minute-wednesday-fukushima.html

HOLYSHIIIT!!!! AND SO IT BEGINS!!!! 70k people being evacuated!!!

Wed, 05/25/2011 - 15:20 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Do you prefer a leg or breast? I prefer the tender rump roast, but what do I know.

I wonder if Tyler will piss in the lobster brain bisque?

Wed, 05/25/2011 - 13:54 | Link to Comment Votewithabullet
Votewithabullet's picture

Fadel is as honest as that bow tie wearing interest rate observer sour puss. Besides Allah dont play that.

Wed, 05/25/2011 - 13:55 | Link to Comment Dolemite
Wed, 05/25/2011 - 13:56 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

Wow - shocked the video feed wasn't killed during that interview.

 

Wed, 05/25/2011 - 17:29 | Link to Comment Pegasus Muse
Pegasus Muse's picture

Guanteed it would have on CNBC. 

Wed, 05/25/2011 - 13:57 | Link to Comment AZSovreign
AZSovreign's picture

The Squid controls the world, Kill the squid and the tentacles will die off.

Wed, 05/25/2011 - 14:05 | Link to Comment SheepDog-One
SheepDog-One's picture

Those kind of boobies right there actually control the world! Hell with these old Zionist farts at GS, boobies!

Wed, 05/25/2011 - 14:08 | Link to Comment AZSovreign
AZSovreign's picture

That's right Dog!!! These babies will be the new control mechanism of the NWO (Nipple World Order).

Wed, 05/25/2011 - 14:14 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

I would gladly be a serf in your NWO.

Wed, 05/25/2011 - 14:25 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Boob jobs included in the expanded Nipple World Order healthcare.

Wed, 05/25/2011 - 14:31 | Link to Comment AZSovreign
AZSovreign's picture

*Announcement* NWO has been changed!! for reference please kindly refer to the NWO as the:

 

Nipple World Orgy™

 

All references to the New World Order only relates the the old crusty dried penis mofo's who are currently in control.

Wed, 05/25/2011 - 14:32 | Link to Comment Vergeltung
Vergeltung's picture

me three.

 

Wed, 05/25/2011 - 14:00 | Link to Comment I am a Man I am...
I am a Man I am Forty's picture

completely obvious to any awake and interested observer

Wed, 05/25/2011 - 14:13 | Link to Comment Ray1968
Ray1968's picture

When the masses gets pissed, stop picketing Exxon. Picket GS and JPM.

Wed, 05/25/2011 - 14:21 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Why picket any of them?  Oil scarcity is the responsibility of no one, and there's nothing to be done about it.  

Party's over.  The cops are coming.  On horses.  Four of them.

Wed, 05/25/2011 - 15:21 | Link to Comment Flakmeister
Flakmeister's picture

Party's over.  The cops are coming.  On horses.  Four of them.

 

Classic.... this one is a keeper.

Wed, 05/25/2011 - 14:05 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

You know, the thing is, NYMEX gets reports from both refineries and shipping terminals of prices paid.  So the front month may be pushed around, but the price that someone pays for the actual liquid (spot) is real.

Bottom line: Those Saudis really stepped up and pumped more oil, didn't they?  As in, no.  You pretty much can't believe a single thing coming out of Aramco nowadays.

Wed, 05/25/2011 - 14:12 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

>>

You have to take into account that we see these numbers don't mean much unless they are consistent. We have not seen a trend yet, but definitely higher gasoline prices at the pump will curtail driving. By how much, we do not know. Some companies say as much as a 5% drop from last month. 

>>

Moron.  GET YOUR MIND CALIBRATED.  High price doesn't affect consumption of a zero elasticity item.  People HAVE TO DRIVE TO LIVE.  Demand destruction IS NOT DISCRETIONARY.  There is no discretionary driving anymore.  Demand destruction is JOB DESTRUCTION.  People don't drive if they have no job.  It's not a discretionary decision where someone casually says  . . . oh, I guess we won't take that sunday drive in the country because gasoline is expensive.  No!  What happens is high price kills economic activity, the guy loses his job, and then he doesn't drive to work.

Wed, 05/25/2011 - 15:21 | Link to Comment MrBoompi
MrBoompi's picture

I see your point, but respectfully disagree. A percentage of our gasoline consumption is discretionary. How much I can't say, but 10-20% is not out of the question.

It's not the same as food. If I can't afford steak I can still buy hamburger. If I can't afford Regular there is no other option but to stay at home or hitchhike.

Wed, 05/25/2011 - 15:51 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Discretionary burning of gasoline is what was squeezed out of habit patterns . . . certainly in 2008, but likely even before.  

Do you hear about Sunday drives with the family anymore?  

The point is the nuance of Demand Destruction must not be spun.  They will try to spin it as "wasteful burning of gasoline ends" and that's crap.  Demand Destruction is destruction of economic activity because all such comes from oil.  

The econo-finance-moneyfromnothing folks hate to think in those terms because once that is recognized, that GDP comes from oil, then they realize they have no more power.  

Bernanke can print what he wants, people can bid Gold or Silver up or down, the ECB can bailout whatever they like, but in the end it is oil that powers the tractors that plant the crops in the necessary quantities to feed 7 billion people.  When it stops doing that, holders of printed money, holders of gold, holders of bailouts . . . they all starve.  

Oil is the alpha asset.  Never forget it.

Wed, 05/25/2011 - 19:55 | Link to Comment grimey
grimey's picture

on that note, i'm surprised we haven't seen more money flow into lifestyle substitutes for oil - transit oriented development, for instance, makes a lot more sense when no one can afford to drive anywhere, but i haven't heard or seen a spike in development, despite a huge market of renters and lower than ever construction labor costs. i'm sure part of this has to do with the government and the banks not wanting to finance the creation of a superior product to compete with the millions of underwater mortgages they already have on their books, but i feel like at least one bank would recognize the long-term shittiness of an investment in remote, exurban, subdivisioned single family houses in a world of rising oil prices, especially compared to medium and high-density centrally-located housing, and knows that they could at least go a long way to destroying their competitors balance sheets by offering their underwater tenants somewhere better to live.  that there isn't tells me either that the banks expect oil prices to decline dramatically in the future (maybe), have colluded and agreed to not do anything that might threaten one another's residential mortgage portfolios (not a Nash equilibrium solution,) or know that investing in urban cores might save cities from bankruptcy and thereby deny the banks the opportunity to screw the cities on unnecessary bond issuances or the opportunity to steal valuable public assets at fire sale prices. 

Wed, 05/25/2011 - 14:17 | Link to Comment UGrev
UGrev's picture

I kept having the visions of Mothra vs Godzilla while watching..

Wed, 05/25/2011 - 14:17 | Link to Comment monopoly
monopoly's picture

double post.

Wed, 05/25/2011 - 14:26 | Link to Comment expectplannedevents
expectplannedevents's picture

What it really means..

The US in not EUROPE! So people have to drive to work and no idiot in Washington planned for local economies without oil!

US is the largest Oil Importer and Currency Exporter and are interdependent..

Oil is the god...everything produced traces back to it. Funny how the US controls only 5% of the world reserves! 95% is foreign companies. Yet, who is the one acting like the bully?

Wed, 05/25/2011 - 15:28 | Link to Comment MrBoompi
MrBoompi's picture

"So people have to drive to work and no idiot in Washington planned for local economies without oil!"
---
Excellent point. In the future we may well become an agrarian society again, where most people do not live in cities and grow their own food.

Are we planning for this? No. But can we do it? Certainly. We'll be forced to or perish.

Wed, 05/25/2011 - 14:28 | Link to Comment Glasgow Gary
Glasgow Gary's picture

Fadel Gheit is a clueless joke, who has got nothing right about the oil market in the last 7 years.

GG

Wed, 05/25/2011 - 15:29 | Link to Comment Flakmeister
Flakmeister's picture

Don't know about the junking.... he is whining that they can't manipulate the markets too...

You are correct, this guy for being a high ranking oil analyst makes David Lereah seem omnipotent.

Fri, 05/27/2011 - 12:24 | Link to Comment rex-lacrymarum
rex-lacrymarum's picture

Please allow me to correct you - Fadel Gheit has been utterly wrong on oil for a minimum of 15 years, if not longer. Why he is an 'oil analyst' only the shadow knows. One would have been short WTIC since it first crossed above $15 if one had listened to him.

Wed, 05/25/2011 - 14:25 | Link to Comment swissinv
swissinv's picture

subject to be sacked

Wed, 05/25/2011 - 14:29 | Link to Comment buzzsaw99
buzzsaw99's picture

Captain Obvious. His comments are worthless.

Wed, 05/25/2011 - 14:41 | Link to Comment WhOracle
WhOracle's picture

shown on bloomberg tv, it will indeed make everyone laugh.

shown on sheeple tv though, obviousness would be a shocking revelation.

Wed, 05/25/2011 - 14:35 | Link to Comment MarketFox
MarketFox's picture

Wonder what the total monthly payment is from Goldman Sachs to Bloomberg.....

 

 

Wed, 05/25/2011 - 14:43 | Link to Comment AldoHux_IV
AldoHux_IV's picture

Government can't regulate nor govern-- it's the people we need to remove and nothing is going to change until that happens.

In the meantime, our country will further face the debilitating effects of the imbalances that have ravaged this economy and a further massacre of the democratic process in this country.

Wed, 05/25/2011 - 14:51 | Link to Comment FOREX loop.
FOREX loop.'s picture

Is it any surprise to us ZH readers that this is happening? They already manipulated the silver market

(a good article I read on that recently is here

http://collegemessiah.blogspot.com/2011/05/market-manipulations.html

)

Big oil gets away with it again.

Wed, 05/25/2011 - 14:51 | Link to Comment SilverDoctors
SilverDoctors's picture

And yet we'll never hear a peep about silver.

Did Comex Registered Silver Supplies Double Overnight? 24hourgold reports silver supplies jumped today from 32 million to 69.3 million ounces.

http://silverdoctors.blogspot.com/2011/05/did-comex-registered-silver-su...

Wed, 05/25/2011 - 14:54 | Link to Comment SRV - ES339
SRV - ES339's picture

Proprietary trading should not have any place (as in zero investment in any form) in Investment Banking... that's the only answer, but of course they get much of their income from it, so they would destroy anyone that even suggested it.

Wed, 05/25/2011 - 14:56 | Link to Comment JW n FL
JW n FL's picture

Here more useless information from wiki! you fucking punks who share nothing other than your pussy hurst feelings should get off of wiki leaks nutz!

 

WikiLeaks: Saudis often warned U.S. about oil speculators By Kevin G. Hall | McClatchy Newspapers

WASHINGTON — When oil prices hit a record $147 a barrel in July 2008, the Bush administration leaned on Saudi Arabia to pump more crude in hopes that a flood of new crude would drive the price down. The Saudis complied, but not before warning that oil already was plentiful and that Wall Street speculation, not a shortage of oil, was driving up prices.

Saudi Oil Minister Ali al Naimi even told U.S. Ambassador Ford Fraker that the kingdom would have difficulty finding customers for the additional crude, according to an account laid out in a confidential State Department cable dated Sept. 28, 2008,

"Saudi Arabia can't just put crude out on the market," the cable quotes Naimi as saying. Instead, Naimi suggested, "speculators bore significant responsibility for the sharp increase in oil prices in the last few years," according to the cable.

What role Wall Street investors play in the high cost of oil is a hotly debated topic in Washington. Despite weak demand, the price of a barrel of crude oil surged more than 25 percent in the past year, reaching a peak of $113 May 2 before falling back to a range of $95 to $100 a barrel.

The Obama administration, the Bush administration before it and Congress have been slow to take steps to rein in speculators. On Tuesday, the Commodity Futures Trading Commission, a U.S. regulatory agency, charged a group of financial firms with manipulating the price of oil in 2008. But the commission hasn't enacted a proposal to limit the percentage of oil contracts a financial company can hold, while Congress remains focused primarily on big oil companies, threatening in hearings last week to eliminate their tax breaks because of the $38 billion in first-quarter profits the top six U.S. companies earned.

The Saudis, however, have struck a steady theme for years that something should be done to curb the influence of banks and hedge funds that are speculating on the price of oil, according to diplomatic cables made available to McClatchy by the WikiLeaks website

Read more: http://www.mcclatchydc.com/2011/05/25/114759/wikileaks-saudis-often-warned.html#ixzz1NONDuDNR

Fri, 05/27/2011 - 12:23 | Link to Comment rex-lacrymarum
rex-lacrymarum's picture

The Saudi oil minister naturally would prefer it if the only entity capable of moving the price of oil were the oil cartel led by - Saudi Arabia! The fact that the Saudi oil minister has a disdain for freely traded markets should not surprise anyone.

Wed, 05/25/2011 - 15:20 | Link to Comment GMRobertson
GMRobertson's picture

A three year old could look at the graphs on oil inventory broken down by PADDs and then distillates and then gasoline and see this market is manipulated.  Crude inventories are massive, especially the largest tank farm in PADD II - we are swimming in oil.  But is is obviously being with held from refining to gas and other products as you look at the PADD for gas.  Furthermore oil is being withheld from NE and Central PADDs and instead put into storage despite the immediate loss to do so.  Capacity with refiners is in some places in the 70% - and this when gas is over $4.00 at the pump?

This Oppenheimer spiel is weak and silly, saying the comments/analysis is manipulations.  Reminds me of the goofy stuff folks said about Kaufman in the 80s at Sali.  But, I do know the oil market is now organized in ways that would gobsmack E. Craig in his heyday during the long bond auctions and makes Mozer look like a saint.

And to be clear, I suspect it is all perfectly legal based on the changes Goldman et al got the CFTC to make long ago.  ICE acts in the same way as the euro dollars did with "petro dollars" in the 70s - moves it off shore and away form prying eyes.

Where the real damage will be done when this corner ends - and it will with oil blowing past 40 to 18(?) as insult to over bidding - and as it crushes China and others and likely every major  college endowment in the USA, not to mention some dopey pension plans who never bothered to think out whether or not their benefits were paid out in oil or US $ - the real damage will be all the false price signals in a Hayek sense for now almost 6 years.

"Commodities are not an asset" - grasshopper, that's the koan.

 

This all started with the Katrina move - remember that?

Wed, 05/25/2011 - 15:32 | Link to Comment MrBoompi
MrBoompi's picture

Of course we know the market's rigged, and we've known it for a long time. But you never hear much about it on the news.

Our government's really on the fucking ball too. While we pay $4/gal today, they announce market manipulation schemes from 3 goddamn years ago!

Really...how fucked are we???

Wed, 05/25/2011 - 15:34 | Link to Comment JW n FL
JW n FL's picture

The F.B.I. investigates civil rights cases.. from 80 years ago.. none where the police are still alive to be prosecuted!

 

here...

 

My Motto! Live it! Love it! Share it!

 

Corporations Own the Lobby!

The Lobby Owns the Government!

Law Enforcement works for the Duly Elected Lobby Whores!

We the People = Screwed!

https://twitter.com/JWnFL

Wed, 05/25/2011 - 15:25 | Link to Comment GMRobertson
GMRobertson's picture

..oh another interesting point and to show how bad this corner is getting.  To the those who keep babbling the mantra  "the USA is the largest oil importer"  donja know?  Will that is sorta true but the bizarre fact is the USA is now a net exporter of crude and oil products.

 

Wed, 05/25/2011 - 16:36 | Link to Comment Flakmeister
Flakmeister's picture

Would you care to clarify the logic by which you arrived at this conclusion. I am all ears.

Wed, 05/25/2011 - 15:34 | Link to Comment samsara
samsara's picture

You know you that the 2 minute warning has sounded, and it's the 'End Game'  when they start turning on each other.

 

 

Wed, 05/25/2011 - 15:52 | Link to Comment MarketFox
MarketFox's picture

And do not forget the GS hotline to GS Gensler....

 

Head of the CFTC.....who is also keeping position limits in favor of JPM and GS.....

 

The GS is playing the US like a drum....and in turn causing untold havoc in developing countries....in terms of both energy and food costs.....

 

 

And GS pays big $ monthly to Bloomberg....

 

They got it all sewn up....

 

 

Wed, 05/25/2011 - 15:56 | Link to Comment Threeggg
Threeggg's picture

On the yahoo market ticker this morning I read an article about the manipulation. (they changed the wording in the whole article now)But, it said that "these traders are taking these huge positions in the physical market with no intention of taking delivery of it".

ROTFLMAO !

Then I thought to myself, what about every other commodity on the planet ?

 

Wed, 05/25/2011 - 16:05 | Link to Comment GMRobertson
GMRobertson's picture

Nah  more fun and good for you to dig into it. 

But will give you a few clues - USA is running out of storage or is now out of storage.  Ever notice the pricing for oil tankers - now majority is on "go slow" to the USA a marine PADD II if you will. 

 

Not only that but I am pretty sure that crude speed of flow in pipelines is at about 1/4 the full capacity speed - who makes that decision I wonder?  Do a little calculations on miles of pipelines and assuming most about 6 feet in diameter figure out the "storage" when the pipeline is slowed 50%.  I think it is length times II r ^2 .  So 3000 miles of pipeline is about  85MM barrels of crude in transit so slowing the pipelines by 50% provides storage of about 40MM barrels - this provides an expansion of almost 50% to PADD II. 

But that amount is  dwarfed with the speed of the approximately  380MM barrels shipped ot the USA per annum via tankers - if that slows by, say, 10%, that increases storage by about 100 MM barrels.

If you are in NYC and can see the harbor can see up to 10 tankers riding at anchor fully loaded - thats about 15 MM barrels storage right there.  I sue to be able to predict oil prices in the late 80s by looking at the harbor and then one morning they would all be gone and that day or next oil would drop 5% to 10%.

 

So not only the PADD II chart is huge over load in oil - where the hell are they keeping it all - but there is a 2X PADD in storage in go slow tankers and pipelines.

 

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current

One thing is certain - no one can explain current WTI and gas price based upon fundamentals.  That is simply an impossibility.

 

Wed, 05/25/2011 - 16:21 | Link to Comment Flakmeister
Flakmeister's picture

Please, Please, let me try....

2004 Brent traded at $40, DXY was about 90. Since 2005, net oil exports are down ~10%. From the IMF oil demand inelasticity -0.06 to -0.07, i.e. 1% decrease leads to a 16% increase in price. I get Brent between $105-125....

Blame your free market, the crude oil is captive to system by the nature of the WTI delivery mechanism, but once refined, you pay prevailing world market prices. (I am allowed to sell my diesel and gas to anyone aren't I?)

Wed, 05/25/2011 - 16:08 | Link to Comment GMRobertson
GMRobertson's picture

oops   did I say 380MM shipped per annum to the USA?  Meant 380 billion

Wed, 05/25/2011 - 16:15 | Link to Comment huckman
huckman's picture

One would think the "position limits" in commodities speculation would have been reinstated by now. 

Wed, 05/25/2011 - 16:14 | Link to Comment suckerfishzilla
suckerfishzilla's picture

Hemp diesel bitchez!

Wed, 05/25/2011 - 16:29 | Link to Comment GMRobertson
GMRobertson's picture

Flakmeister

 

Thats the point.  I find it ridiculous to use elasticities from some Econ 101 and further more we have a completely different conversation to chat about dollar and mercantalism.  But, China's scramble to hoard commodities - they have to as they inport so much - so as to alleviate their trade numbers and also to find some non dollar hedge to sovereign accounts - thats another corner and manipulation that has a ven set overlap on the oil markets but a different topic.  Thats makes use of elasticities even more ridiculous and risible.

Wed, 05/25/2011 - 16:39 | Link to Comment Flakmeister
Flakmeister's picture

Sorry, you wanted fundamentals, so I gave you net oil exports, i.e. the amount of oil that is on the market, I give you supply and demand inelasticities, and I give you the currency in which the product is traded. If that is not fundamentals what the fuck is?

BTW, could you respond my comment to your comment about the US being a net exporter.. I would really like to see that....

Wed, 05/25/2011 - 16:37 | Link to Comment GMRobertson
GMRobertson's picture

Basically the entire conspriracy will just go "poof" overnight if all commodity trading results by tax exempts (endowments and pensions) has UBTI applied, all financial users (abusers) of commodity futures be returned to speculator status and lose their hedge status, and the GSCI is collapsed, perhaps banning it even for derivatives or product use - beats me how - and all US tax exempts must become transparent in all commodity positions and trading with a report filed monthly, whether if they trade direct or via third parties such as hedge funds.

 

If that is done the squash court loses one wall and no longer can they play the corner shot.

Wed, 05/25/2011 - 16:41 | Link to Comment Flakmeister
Flakmeister's picture

Speculation can only exacerbate the underlying trend....it cannot change it.

Wed, 05/25/2011 - 19:16 | Link to Comment Problem Is
Problem Is's picture

I am shocked, shocked(!) to find that Goldman is the oil speculators Obama Bin Lyin' was complaining about...

BTW Goldman: CREEP needs more campaign bribes...

CREEP: Committee to RE-Elect the President...

Mon, 05/30/2011 - 20:41 | Link to Comment brand shoes
brand shoes's picture
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