Big fund money and their effect on oil markets

[sweeps]

Members of Congress, their ears bent by angry motorists paying nearly $4 a gallon for gas, are considering increasing the amount of money investors have to put up front in order to buy oil futures.

Some say this may work, as a lot of the investor interest in commodities is due to the fact that they can essentially gamble with a million dollars worth of oil by putting up $100,000 or less of their own money. In the stock market, they'd need to put up $500,000.

Oil prices: Wall Street's game

[sweeps]

Personal note: This oil bubble is going to pop, and when I say pop I mean EXPLODE.

[Broken Arrow]

Yeah, I pretty much agree.

I've mentioned this before, but let me qualify again that I don't think oil is that easy to figure out.... A recent article from Business week reflects this sentiment as well.

That said, I just don't see any signs that suggest that oil can sustain this level of highs. I'm no quant, but oil trading is erratic, suggesting either high volumes of speculation, the lack of clear valuations, or most likely both. I really wish I had some oil stocks I can sell right about now. For those that do, I'd put it on a hair trigger. In fact, I'm almost tempted to short oil.

Of course, for all I know, it could end up being $200 a barrel.... But I really doubt it. Nobody, except speculators, want the oil prices to go any higher. That's a pretty small group leveraging against the rest of the United States.

I for one hope speculators will get out fast on this one. As the saying goes, "Only Bulls and Bears make money. Pigs will get slaughtered."

[Scanner]

I do think it could sustain $100/barrel and perhaps there could be "opposite speculation" to drive it down to $60/barrel.

This has a lot to do with our currency vs. supply/demand.

American dollars are becoming the new "funny money." Oil is a "universal commodity" with great intrinsic worth (more than gold and silver IMO). If I have an barrel of oil in my backyard. . .I can sell that in Saudia Arabia. . .in Greenland. . .in Madascar. . .anywhere, because it's universally valuable.

American dollars? Ehhhh. Not so much any more.

Anyone should be able to invest in oil, whether it's $1.00 or $1,000,000.

I need exposure to a commodity and in fact, as a small investor, I demand it.

Boycotting small investors is wrong.

EDIT:

To further expand upon my point, when my portfolio reaches $100,000, I plan to speculate with 5% of it per year. . .I thought $5000 was the minimum purchase on the commodity futures exchange. That 5% may represent a pivotal part of my portfolio.

I don't get why speculators aren't allowed to speculate. Speculation balances hedgers.

[sweeps]

I think you missed the point, Scanner. You're putting up your own money, that's not the problem. The proposed new rules would limit speculating on the margin. Right now the big guys are making gigantic bets with relatively little capital, and frankly it's hurting everybody. This happens again and again where the big guys are too big to fail so they freely take these bets knowing they'll get bailed out by the taxpayers if they lose. Let's rein them in, NOW.

Edit: And while we're at it, let's start raising interest rates. Let's soak up some of this reckless money out there. And stop debasing our currency.

[cashing_in]

The oil prices has increased to 122 per barrel.

cheers

[Broken Arrow]

Well, the Memorial's Day holiday weekend is coming up, so I don't think many are expecting oil to go down right RIGHT now.

[cptacek]

we're looking to put in an oil well on some land we are buying. As soon as we drill it, the price will crash. I'll let you know

[Broken Arrow]

Wow, now here's something you don't see every day!

Oil is at a record high, but it's because speculators are actually SHORTING it!

[sweeps]

Interesting article, BA. Thanks for sharing.