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51 comments on Aren't a lot of people's lives changing for the worse?
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51 comments on Aren't a lot of people's lives changing for the worse?
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But when it becomes obvious that the admin has declared war on all factors leading to high gasoline prices, including the price of crude feedstock, this emboldens the short sellers. I think this is why crude is now cheaper than it was before Katrina, in spite of reduced supply.
On 9/6, Rebecca Watson of Interior Dept. also predicted (to Congress!) a fast recovery of GoM production, barring problems with shore facilities, when IMO she didn't have enough data to make such a claim, which implied no undersea pipeline problems. Another manuever to squelch speculation & rising crude prices...
Last month we had an enormous rise the last few days of month in gasoline futures. Let's see if we have another one this month.
If there is 20% less refinery capacity and we refine the 20ish million barrels per day that we use, and 100% of GOM production is shut in, and this is 1.5 mbd. 20% of 20 is 4 million barrels of refining capacity offline so we would in theory have plenty of 'oil' and not enough refinery. This would be a clever explanation for why crude is down overnight except for the fact that unleaded gas is down as well....
I also noticed that there was quite an uptick in crude just about when petroleum inventory data came out last Wednesday. Reality can be an ugly shock for the shorts that depend on fear & price momentum. If that's a trend, low crude price could be quite "short-lived". The next few Wednesdays should be interesting.
Also, easy-to-restart offshore stuff got fixed in 8 days post-Ivan, 9-10 days post Katrina, and ?? days after Rita. Afterwards, MMS figures for decrease of shut-in oil & gas went flat, eg almost zero rate of production recovery, for oil, for about a month (post-Ivan) and 14 days (post-Katrina). In latter case, recovery was halted by Rita, and likely would have taken longer than from Ivan, absent Rita.
Watching MMS shut-in data for next few days & weeks should also be quite interesting.
There's another flaw in your thesis... energy futures contracts terminate three days before the end of the expiry month, but there is very low volume in the expiring contract (generally less than 1/10th normal) starting from a week prior to termination.
If one wanted to manipulate prices that mattered, you'd do it in the following month contract.
This is a speculative comment, for which I have no proof that it is occurring. But say, for example, that the government sold gasoline futures contracts short (that is it did not have the gasoline to deliver). It would have to make delivery or buy those contracts back.
There was little reason for the Government to sell short unless they believe prices are headed lower, and except for a couple of down days in mid August, there was precious little obvious selling pressure in the commodity. A couple of down days do not give one license to short with abandon... those that do generally end up being 'fuel' for another move... up!
I do remember the time ... roughly in mid-August there were technical setups on the charts that suggested a potential top was forming, but it was never confirmed and the trend remained intact.
Crude terminates not three days before the end of the contract month but three business days prior to the 25th day of the month before the delivery month, unless its a non business day in which case... well, you get the picture.
see charles' that comment that i quoted lower in this thread.
the govt is willing to risk exposure of its control of markets to calm the markets. they expect that most traders have already figured out that the whole lashup is a pig-in-a-poke, and will play along.
I suppose the govt could lean on the sell button and drive prices down for awhile, but I don't suspect them of it at this time. The IEA and releases from SPR and various noises from OPEC and -egads- a friendly word from Hugo Chavez or two could do more to bring down price in a lasting way.
Leaning on the sell key for a day or two merely gets others in the hert short too, and unless a seller with no profit motive (to use your thesis) stays in there selling, forever, eventually price will stop going down and those who tagged along for the ride start to cover... et voila, a move up is born. Eventually all things that go down, come up and vice versa.
This is not to say that an organized scheme to sell short the market could not be done, but it would leave a paper trail that eventually would become noticable. 1.5 billion in crude oil is consumed each and every day in the US - it wouldn't be long before a large hole in the "ESF" or other such funds were noted.
It would be nice if we could rely upon the government of the day to live up to its ideological underpinnings, all of the time, for then they'd be predictable - but lets just, for now at least, assume that the free-marketeers are still in control (Energy Secy Bodman certainly fits the mold by all appearances) -- mucking about with the price of oil here goes quite contrary to such folks.
The other not so small consideration we should make here is how oil companies, a well represented lobby group in every national capital, would react to such manipulation.
Nope, I'm not a big fan of price manipulation theories, not at present. I do believe there is a concerted effort to talk up the situation, and suspect its only because the reality is about what we expect - its even worse than it appears.
A couple days up or down is irrelevant in the big picture.
Proof, please.
(I'm not saying you're wrong, I'm not saying you're right. But extraordinary claims require extrordinary proof. I am a strict empiricist; show me proof and I'll agree with you 100%.)
look, i'm just as hopeful as anyone that we can get out of this mess without killing millions of people, using ethical, truthful means to do so. but the deeper i dig, the more ugliness i find. sometimes i have a hunch, and have to quit digging for a couple days to drink beer and let the confirmation of that hunch settle in before i can go back to digging.
i suppose i am being naive to expect there are any rules left at all when an empire is fighting for its life.
Kunstler, in today's missive, also suspects government intervention:
http://www.kunstler.com/mags_diary15.html
Like I previously implied, the energy markets won't be fooled my short term manipulation. Let's see how these October energy contracts settle in the next few days. No I don't have nay proof, but wild last minute fluctuations in the closing days of a contract may indirectly reveal what can not be proved.
Regards.
NG, CL both rallying quite strongly, setting up the stage for what is known as the "piercing line" candle reversal pattern at a point where price could be said to have found "support" (thus implying the ability to rally higher).
Sometimes Occam's law makes sense.
In this case, the simplest is that regular traders are the principle drivers of energy markets whether energy markets go up or down.
I've mentioned a number of times over the weekend that my expectation was for a short covering rally if not a "common sense" rally ... and here it is.
Long energy, short broader markets I remain.
If we don't hear of any major trading firm with losses, then who has the deep pockets to lose so much???
in my short time in this forum, i have posted maybe a billion urls. nobody has been able to refute them. if you object to a position of mine, you are certainly encouraged to post urls that contradict mine.
maybe we'd both learn something, on the off chance that anybody wants to learn anything that gores an ox or two, or threatens a sacred cow, or mentions a prominent but ignored elephant in the room.
that's the biggest problem with this whole operation: it was conceived by armchair warriors whose arrogance and hubris are much greater than their wisdom. they figured they could pull it off, and they figured they could cover it all up, and they figured they had enough juice to bull on through no matter what. the official conspiracy theory will hold, by the grace of god, the washington post and the new york times.
the problem i have to think about is this: what caused such desperate, reckless, foolhardy behavior? is peak oil much closer than we think? or can we simply write the whole thing off to egomania...?
i wish i knew. but the bones of it are out there, all you have to do is dig.
The least we can do in an open forum is to question, and to respect those who ask.
Diamond Offshore Drilling, reported that the drilling rigs Ocean Saratoga and Ocean Star broke free from their moorings as Hurricane Rita passed west of both semisubmersibles. Both of the units and their well operations were secured and personnel were evacuated well in advance of the storm.
Rowan Companies reports that, in the aftermath of Hurricane Rita, its jackup rigs Rowan Odessa and Rowan Halifax were not at their pre-storm locations. In addition, the hull of the jackup Rowan Louisiana apparently detached from its legs and is aground offshore Louisiana.
Kerr-McGee reports that an initial flyover of its Gulf of Mexico facilities indicates all of its major operated facilities are intact, with no structural damage from Hurricane Rita observed.
Initial assessments have revealed that the Typhoon tension leg platform (located in 2,000 feet of water in the Green Canyon area approximately 165 miles south-southwest of New Orleans) was severed from its mooring and suffered severe damage during the storm.
http://electricity.doe.gov/documents/gulfcoast_report_092605.pdf