Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law” - News and Current Events | futures.io
futures.io futures trading

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”
Started:March 7th, 2012 (06:10 PM) by kbit Views / Replies:310 / 0
Last Reply:March 7th, 2012 (06:10 PM) Attachments:0

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”

Old March 7th, 2012, 06:10 PM   #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,839 since Nov 2010
Thanks: 3,275 given, 3,321 received

Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”

The recent rise in gasoline prices has prompted Congressional hearings and a call to federal regulators to curb what many see as the cause for the spike: oil speculators.

A House subcommittee held a hearing on "The American Energy Initiative" Wednesday morning that focused solely on rising pump prices. Seventy members of Congress signed a letter this week to regulators at the Commodity Futures Trading Commission (CFTC), urging immediate action on oil speculation by enacting "strong position limits" and to "utilize all authorities available to…make sure that the price of oil and gasoline reflects the fundamentals of supply and demand."

The CFTC was given authority in the Dodd-Frank Wall Street Reform and Consumer Protection Act to impose position caps on oil traders beginning in January 2011. These limits have not yet been implemented by the CFTC. In an interview Wednesday with The Daily Ticker, Sen. Bernie Sanders (I-VT) says the CFTC doesn't "have the will" to enact these limits and "needs to obey the law."

"What we need to do is…limit the amount of oil any one company can control on the oil futures market," says Sanders, who has long advocated limits on speculation. "The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell."

The average price of a gallon of gasoline in the U.S. has increased nearly 30 cents in one month according to the AAA's Daily Fuel Gauge Report. U.S. oil prices have jumped more than six percent since Feb. 1 even though oil demand in the U.S. is at its lowest level since April 2007. The International Energy Agency (IEA) reported that the world's oil supply rose by 1.3 million barrels a day in the last three months of 2011 while world demand increased just 0.7 million barrels per day during that same time period.

This is not the first time oil speculators have been blamed for higher energy prices. In 2008 U.S. oil prices skyrocketed to $145 per barrel and gasoline prices averaged well above $4 per gallon. There were calls to increase domestic offshore drilling and legislation was proposed that would have required buyers of oil to physically own and store the oil barrels. Then the 2008 financial crisis hit causing oil and gasoline prices to plummet.

Blaming the speculators may seem like scapegoating to some (namely, oil traders) but speculators control more than 80 percent of the energy futures market, up from 30 percent a decade ago, and there is mounting evidence that speculation contributes to higher prices:
  • At a Senate hearing last June, Rex Tillerson, the CEO of ExxonMobil, said speculation was driving up the price of a barrel of oil by as much as 40 percent.
  • A study conducted by the nonpartisan consumer advocacy group Consumer Federation of America found that speculation caused the average American household to spend an additional $600 on gasoline expenditures in 2011. Moreover, the report concluded that excessive speculation (which the organization estimated added about $30 per barrel to the cost of oil in 2011) drained the U.S. economy of more than $200 billion in consumer spending in 2011.
  • The St. Louis Federal Reserve has also recommended that the CFTC do more to prevent oil speculators from driving up the price of oil. Fed officials studied the effect of oil traders on the price oil over five years and determined that "speculation contributed to around 15 percent to oil prices increases."
  • CFTC Chair Gary Gensler declared last year that "huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices."
There are many components reflected in the current price of oil, including old-fashioned supply and demand and geopolitical factors (such as a possible attack on Iran). Rising gasoline prices are a huge pocketbook issue for many Americans, a reason alone for politicians to focus on the role of the speculators.


Reply With Quote


futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
Do you get stopped out too often? aligator Traders Hideout 25 February 5th, 2012 08:08 PM
Iran May Seek Death Penalty For Currency Speculators kbit News and Current Events 0 February 2nd, 2012 09:46 PM
Speculators Set New $28.1 Billion Record In Net Euro Shorts kbit News and Current Events 1 January 27th, 2012 09:38 PM
Oil speculators charged with price manipulation Gary Off-Topic 3 May 24th, 2011 06:36 PM
Stop profiteering by oil price speculators DionysusToast News and Current Events 11 March 15th, 2011 09:04 PM

All times are GMT -4. The time now is 04:26 AM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-28 in 0.07 seconds with 19 queries on phoenix via your IP