From what I understand the speculators hedge in what's called a "straddle" where they make money which ever way it goes. They don't care about the price, they care about volatility.

End margin trading for unqualified speculators. Margin trading of stocks was critical in creating the great depression. Ideally the only firms allowed to trade on margin would be refineries and major consumers i.e. airlines and UPS. You know, people who might actually hold onto a contract to maturity.

heh

If oil is still over $100/barrel, I think other people are having the trouble.

Before the OPEC oil embargo of the early 1970s, oil was pegged at $1.50/barrel. And my lawn was kid-free.

Do the kids these days even know about the "oil hits the anus" thread?

MusicMakeMyHeadPound: Do the kids these days even know about the "oil hits the anus" thread?

No, because the cost of oil hitting an anus is now $100 per ring.

Hah, I know this currency trader guy who bought a bunch of puts at far more than $100.

MusicMakeMyHeadPound: Do the kids these days even know about the "oil hits the anus" thread?

If so, a courtesy to the uninitiated.

Wednesday's crude inventories report showed another large increase, the sixth in a row and one that put crude supplies at a 21-year high.

So...could one of the "oil prices are not the fault of speculators" people come in here and explain supply and demand to me again?

I know demand is up, but standing inventories are at a 21 YEAR HIGH. Global oil production is outstripping demand.

Even with more expensive drilling methods being used, it would seem oil should be closer to $80-$85 / barrel instead of over $100 / barrel.

Dog Welder: Wednesday's crude inventories report showed another large increase, the sixth in a row and one that put crude supplies at a 21-year high.

So...could one of the "oil prices are not the fault of speculators" people come in here and explain supply and demand to me again?

I know demand is up, but standing inventories are at a 21 YEAR HIGH. Global oil production is outstripping demand.

Even with more expensive drilling methods being used, it would seem oil should be closer to $80-$85 / barrel instead of over $100 / barrel.

If speculators are actually hoarding physical oil, then they can influence the price of oil.

Also, if producers are hoarding oil, that can increase prices.

But trading on the futures market without taking delivery will have no more than marginal impact in prices because the speculator has to sell prior to delivery. One purchase and one sale does not represent and increase in demand.

Debeo Summa Credo: Dog Welder: Wednesday's crude inventories report showed another large increase, the sixth in a row and one that put crude supplies at a 21-year high.

So...could one of the "oil prices are not the fault of speculators" people come in here and explain supply and demand to me again?

I know demand is up, but standing inventories are at a 21 YEAR HIGH. Global oil production is outstripping demand.

Even with more expensive drilling methods being used, it would seem oil should be closer to $80-$85 / barrel instead of over $100 / barrel.

If speculators are actually hoarding physical oil, then they can influence the price of oil.

Also, if producers are hoarding oil, that can increase prices.

But trading on the futures market without taking delivery will have no more than marginal impact in prices because the speculator has to sell prior to delivery. One purchase and one sale does not represent and increase in demand.

Saying it and providing no corroborating evidence does not make it so. If it did, The Bible would be factual.

wildcardjack: From what I understand the speculators hedge in what's called a "straddle" where they make money which ever way it goes. They don't care about the price, they care about volatility.

They set up a put and call for the same time at the same price on the same security. If the security goes up you exercise the call (because you're buying the security from someone at a pre-agreed price lower than the current price you can turn around and sell it at) and if it goes down you exercise the put (because you're selling the security at a pre-agreed price that's more than what it costs you to buy it in the market at the moment).

You can still lose, though. The trick is figuring out the dates to set the options for. If the price doesn't change enough either way before your options expire you get screwed because it cost more to set the house of cards up than you can get out of it.

It's just another bullshiat financial shell game very rich people can play to manipulate money out of everyone else without actually doing anything useful or taking on the same types and levels of risk the rest of us would have to assume.

I really don't understand why you can speculate on things like oil anyway. If you want to buy an oil contract, you should be obligated to take the delivery at which point you can turn around and sell it, but not before. Critical commodities that underpin the entire economy should not be the subject of gamesmanship between extremely rich parties who have no actual interest in the commodity.