NexusFi: Find Your Edge


Home Menu

 





Stop profiteering by oil price speculators


Discussion in Traders Hideout

Updated
    1. trending_up 3,400 views
    2. thumb_up 8 thanks given
    3. group 1 followers
    1. forum 11 posts
    2. attach_file 0 attachments




 
Search this Thread

Stop profiteering by oil price speculators

  #1 (permalink)
 
Jigsaw Trading's Avatar
 Jigsaw Trading  Jigsaw Trading is an official Site Sponsor
 
Posts: 2,988 since Nov 2010
Thanks Given: 831
Thanks Received: 10,393


Quoting 
Dear Chairman Gensler,

There is strong evidence the recent surge in gas prices has little to do with the fundamental supply and demand for oil. Government data confirm that oil speculators are driving the price increase. We urge you to restore integrity to our energy markets by exercising the CFTC’s authority to require higher margin levels for speculative oil futures contracts.

Speculators are seizing on recent political turmoil in North Africa and the Middle East to drive energy prices to unwarranted levels. The Commitment of Traders Report reveals that speculators have flooded into the market in recent weeks. Since protests began in Egypt on January 25, 2011, money managers have increased their long positions in NYMEX West Texas Intermediate crude oil futures contracts by more than 35 percent, or the equivalent of 75 million barrels of oil. Oil speculators have increased long positions on the Intercontinental Exchange by nearly 50 percent. At the same time, actual legitimate hedgers have reduced their long positions in the oil futures markets.

The loser in this game of oil speculation is the American consumer. Rising oil futures translate into higher gas prices, and that means Americans have less money in their pockets to pay for basic needs.

In the Dodd-Frank Wall Street Reform and Consumer Protection Act, we empowered your Commission with a number of new tools to rein in excessive speculation and prevent market failures. In addition to mandating speculative position limits, we removed the broad statutory restriction that prohibited the CFTC from imposing higher margin requirements. Section 736 authorizes the CFTC to require higher margin requirements in order to protect the financial integrity of the futures trading markets. Now is the time to exercise that authority. New margin requirements could take effect as soon as July, but the CFTC must begin the rulemaking process now. Higher margin levels would reduce incentives for excessive speculation by requiring investors to back their bets with real capital.

For the same reason we don’t let pharmaceutical companies approve their own drugs, we shouldn’t let futures exchanges self-regulate by setting their own margin requirements. This hand’s-off, self-regulatory approach has led to a fundamentally inequitable system in which ordinary investors are required to post 50 percent margin to buy a stock, but Wall Street traders post only six percent to purchase a risky and volatile futures contract.

We urge you to act quickly to raise the margin requirements imposed on speculative oil contracts. The margin increase should only apply to speculators, not legitimate hedgers. This is consistent with current exchange policies that apply different margin requirements for investors and bona fide hedgers. With your leadership, we can discourage damaging and excessive speculation in the oil markets and bring down gas prices.
Sen. Bill Nelson (D-Fla.) is a member of the Senate Budget, Commerce and Finance Committees.

More here : Stop profiteering by oil price speculators - The Hill's Congress Blog

I have to say - I do agree that speculation is driving prices and it is no longer supply and demand for oil but supply and demand for contracts that drives prices.

Anyone?

Visit my NexusFi Trade Journal Started this thread Reply With Quote
Thanked by:

Can you help answer these questions
from other members on NexusFi?
NexusFi Journal Challenge - April 2024
Feedback and Announcements
My NT8 Volume Profile Split by Asian/Euro/Open
NinjaTrader
Deepmoney LLM
Elite Quantitative GenAI/LLM
ZombieSqueeze
Platforms and Indicators
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
61 thanks
Funded Trader platforms
39 thanks
NexusFi site changelog and issues/problem reporting
26 thanks
Battlestations: Show us your trading desks!
26 thanks
The Program
18 thanks
  #2 (permalink)
 
Silvester17's Avatar
 Silvester17 
Columbus, OH
Market Wizard
 
Experience: None
Platform: NT 8, TOS
Trading: ES
Posts: 3,603 since Aug 2009
Thanks Given: 5,139
Thanks Received: 11,527


DionysusToast View Post
More here : Stop profiteering by oil price speculators - The Hill's Congress Blog

I have to say - I do agree that speculation is driving prices and it is no longer supply and demand for oil but supply and demand for contracts that drives prices.

Anyone?

I started a similar thread here:


Reply With Quote
  #3 (permalink)
 
Jigsaw Trading's Avatar
 Jigsaw Trading  Jigsaw Trading is an official Site Sponsor
 
Posts: 2,988 since Nov 2010
Thanks Given: 831
Thanks Received: 10,393


Sorry abt that - I missed it - how do we get the powers that be to merge the threads?

Visit my NexusFi Trade Journal Started this thread Reply With Quote
  #4 (permalink)
 
Silvester17's Avatar
 Silvester17 
Columbus, OH
Market Wizard
 
Experience: None
Platform: NT 8, TOS
Trading: ES
Posts: 3,603 since Aug 2009
Thanks Given: 5,139
Thanks Received: 11,527


DionysusToast View Post
Sorry abt that - I missed it - how do we get the powers that be to merge the threads?

no problem. probably a mod would have to do that. but I don't care if there's more than one thread, because it's an interesting and important issue.

increasing margins is one step. another could be trading halts after a certain move. or my favorite one, no day trading allowed (maybe except the hedgers).

Reply With Quote
  #5 (permalink)
 
Jigsaw Trading's Avatar
 Jigsaw Trading  Jigsaw Trading is an official Site Sponsor
 
Posts: 2,988 since Nov 2010
Thanks Given: 831
Thanks Received: 10,393

I wonder if day trading has the impact though.

A day trader would be neutral at the end of the day so long term price impact should be minimal, right?

Still - I'd be OK with $25k margin for a crude contract. It would be a very different market though....

Visit my NexusFi Trade Journal Started this thread Reply With Quote
  #6 (permalink)
 
Silvester17's Avatar
 Silvester17 
Columbus, OH
Market Wizard
 
Experience: None
Platform: NT 8, TOS
Trading: ES
Posts: 3,603 since Aug 2009
Thanks Given: 5,139
Thanks Received: 11,527


DionysusToast View Post
I wonder if day trading has the impact though.

A day trader would be neutral at the end of the day so long term price impact should be minimal, right?

Still - I'd be OK with $25k margin for a crude contract. It would be a very different market though....

could be. I'm just wondering how much volume is done by day traders. I bet it's a lot. and if that volume is missing, then maybe this market is less attractive for speculators in general.

Reply With Quote
  #7 (permalink)
 
ThatManFromTexas's Avatar
 ThatManFromTexas 
Houston,Tx
 
Experience: Advanced
Platform: NinjaTrader
Broker: Mirus Futures/Zen-Fire
Trading: TF
Posts: 2,265 since Feb 2010
Thanks Given: 1,206
Thanks Received: 4,348

Typical short sighted knee jerk reaction from a sound bite seeking politician who lacks any understanding how the markets work.

Make it too difficult to trade here... big boys will just go offshore...

The Dubai Exchange would love to become the world trading center for Oil...

Even if they outlawed oil speculation ...

How are they going to control foreign traders?

Wall Street will just have their foreign offices handle the trading.

This should work well , I mean the Kyle bill made all the internet gambling sites go out of business ... right?

Gov'ment needs to stay outta the Ol Bidness....

Regards,
TMFT

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
Reply With Quote
  #8 (permalink)
 
Silvester17's Avatar
 Silvester17 
Columbus, OH
Market Wizard
 
Experience: None
Platform: NT 8, TOS
Trading: ES
Posts: 3,603 since Aug 2009
Thanks Given: 5,139
Thanks Received: 11,527


ThatManFromTexas View Post
Typical short sighted knee jerk reaction from a sound bite seeking politician who lacks any understanding how the markets work.

Make it too difficult to trade here... big boys will just go offshore...

The Dubai Exchange would love to become the world trading center for Oil...

Even if they outlawed oil speculation ...

How are they going to control foreign traders?

Wall Street will just have their foreign offices handle the trading.

This should work well , I mean the Kyle bill made all the internet gambling sites go out of business ... right?

Gov'ment needs to stay outta the Ol Bidness....

Regards,
TMFT

I'm not a politician, but lacking understanding. would you mind enlighten me how markets work?

thank you.

Reply With Quote
  #9 (permalink)
 
ThatManFromTexas's Avatar
 ThatManFromTexas 
Houston,Tx
 
Experience: Advanced
Platform: NinjaTrader
Broker: Mirus Futures/Zen-Fire
Trading: TF
Posts: 2,265 since Feb 2010
Thanks Given: 1,206
Thanks Received: 4,348


Silvester17 View Post
I'm not a politician, but lacking understanding. would you mind enlighten me how markets work?

thank you.


Disclaimer: I am not a programmer, coach, trainer or self appointed guru and do NOT hold myself up to be a good example for anything. I do not have a book, trading room or seminar. Even though I have an opinion on every subject you can imagine, I do not give financial advice.

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
Reply With Quote
Thanked by:
  #10 (permalink)
 
Silvester17's Avatar
 Silvester17 
Columbus, OH
Market Wizard
 
Experience: None
Platform: NT 8, TOS
Trading: ES
Posts: 3,603 since Aug 2009
Thanks Given: 5,139
Thanks Received: 11,527



ThatManFromTexas View Post
Disclaimer: I am not a programmer, coach, trainer or self appointed guru and do NOT hold myself up to be a good example for anything. I do not have a book, trading room or seminar. Even though I have an opinion on every subject you can imagine, I do not give financial advice.

thanks. but you do have a good sense of humor. that's worth a lot.

Reply With Quote




Last Updated on March 15, 2011


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
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.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts