Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.
But when the Commodity Futures Trading Commission examined Vitol’s books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol’s portfolio — at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.
The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.
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Tags: CFTC, Commodities, Credit Crisis, Economy, Enron, Futures, Goldman Sachs, Morgan Stanley, NYMEX, Oil, Oil Futures, Oil Prices, Speculators, Trader, U.S., Wall Street
“There may have been multiple ‘positions’ which were reclassified … but they all appear to have been held by just one trader, and this was a very special trader, with an enormous concentration of positions in crude oil amounting to perhaps 460 million barrels, and not much interest in anything else,” noted John Kemp of RBS Sempra Commodities.
NEW YORK (Reuters) – A quiet data revision that has boosted by nearly 25 percent the number of oil futures contracts U.S. regulators think are held by speculators is raising eyebrows in the energy trading community.
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Tags: Bankruptcy, Barclays, Commodities, Futures, Justice Department, NYMEX, Oil, Oil Futures, Oil Prices, RBS, SemGroup, Speculators, Trader, U.S.
WASHINGTON (MarketWatch) — A bill that would put new limits on speculative trading in energy commodities failed to get the required two-third majority of votes to pass the House on Wednesday.
The vote was 276 to 151. The Commodity Markets Transparency and Accountability Act would boost staffing at the Commodity Futures Trading Commission and require the agency to limit the positions of speculators in energy and agricultural commodities.
Most Republicans objected to the bill, preferring to pass legislation to open the outer continental shelf and other off-limits areas to energy exploration. Continue reading »
Tags: bill, Commodities, Economy, Futures, market, market manipulation, Politics, Republicans, Speculators
Food riots have broken out across the globe destabilizing large parts of the developing world. China is experiencing double-digit inflation. Indonesia, Vietnam and India have imposed controls over rice exports. Wheat, corn and soy beans are at record highs and threatening to go higher still. Commodities are up across the board. The World Food Program is warning of widespread famine if the West doesn’t provide emergency humanitarian relief. The situation is dire. Venezuelan President Hugo Chavez summed it up like this, “It is a massacre of the world’s poor. The problem is not the production of food. It is the economic, social and political model of the world. The capitalist model is in crisis.”
Right on, Hugo. There is no shortage of food (This is disinformation – The Infinite Unknown); it’s just the prices that are making food unaffordable. Bernanke’s “weak dollar” policy has ignited a wave of speculation in commodities which is pushing prices into the stratosphere. The UN is calling the global food crisis a “silent tsunami”, but its more like a flood; the world is awash in increasingly worthless dollars that are making food and raw materials more expensive. Foreign central banks and investors presently hold $6 trillion in dollars and dollar-backed assets, so when the dollar starts to slide, the pain radiates through entire economies. This is especially true in countries where the currency is pegged to the dollar. That’s why most of the Gulf States are experiencing runaway inflation. Continue reading »
Tags: Ben Bernanke, Bush administration, CFTC, China, Commodities, Dollar, Enron, Financial Tsunami, Food Prices, Food Riots, Futures, Hugo Chavez, India, Indonesia, Inflation, Oil, rice, rice exports, Speculators, Tsunami, U.N., Vietnam, Wall Street