Oil Moving up again

StevieJ

Generali wrote: »

Today's the last trading day of the October 2008 Futures contract and this is a short squeeze. Oil is up 20% but gasoline is only up 4%. It looks to me like another hedge fund trade: loads of hedge funds make the same trade and then they get killed trying to get out of it. The price was up 30% at one point intraday apparently!

The price will collapse again over the next week or so I suspect. After all, nothing really changed today to make oil worth that much more.

On Bloomberg it mentioned that some fund had been caught on the wrong side.

Generali

StevieJ wrote: »

On Bloomberg it mentioned that some fund had been caught on the wrong side.

I saw that comment and it's a little ambiguous.

Do they mean wrong side as in losing money or do they mean wrong side as in 'I meant to buy and I sold instead by accident'?

The former happens all the time. The latter is a serious embarassment and has to be noted for the FSA.

Anyway, all this oil price excitement is still just a short squeeze. All those guys that were short had to close out their positions today for the October contract. As a result the price rose in an illiquid market. The market was illiquid as there were few people on the sell side.

fc123

amcluesent wrote: »

> There is a wall of money out there that has no corresponding useful product in the economy<

Yep. That's why Hirst's recent auction of pickled cows netted $100M+. Madness.

The Hirst sale may not have been quite what it seemed.........plus a hedge fund or 2 lost a load of £££ betting on Sothebys shares falling if the sale flopped. They lost.

Rumours are circulating in the art world that, in fact, it was only thanks to the dealers that he was able to defy gravity.

One leading collector, who asked not to be named, said: “Nothing can convince me that on the very day banks were collapsing around us, collectors were buying these works at Sotheby’s. I don’t care how rich you are or where you’re from. When it looks like the world is going under, nobody buys.”
Another high-profile collector, who also asked not to be named, said: “The Damien Hirst industry is a skilfully managed market. It would be in a lot of people’s interest to make sure this sale worked.”

Modern art auctions are highly secretive. The auction houses protect the names of buyers and many bids are made through proxies or by telephone.
The Sunday Times has acquired a list compiled by three saleroom correspondents who attended the auction. They took a note of the winning bidder and the second highest, known as the “under-bidder”.

The list shows that a substantial role was played by Jay Jopling, Hirst’s long-standing friend and dealer. Jopling, the son of a former Conservative minister who established the White Cube as one of London’s best known galleries, bought £7.2m of artworks in the sale.

http://www.timesonline.co.uk/tol/news/uk/article4795010.ece


I don't invest in anything but myself but IF I were going to put £££ in anything right now, it would be recycling.

sabretoothtigger

When theres a sharp movement its often a good time to anticipate the opposite happening soon after, it makes for good odds on a bet
Opec cut production, cant see much reason for a big rise beyond that

I were going to put £££ in anything right now, it would be recycling

hydroponics and biodiesel would rival these fortunes if it became feasible on a large scale

posh*spice

Oil Short Squeeze, Gain Prompt Calls to Curtail Speculators - Bloomberg


and wouldn't this be good news

George To return to ER - tee hee

WTF?_2

posh*spice wrote: »

Oil Short Squeeze, Gain Prompt Calls to Curtail Speculators - Bloomberg

Those dirty speculators - someone please stop them, for the sake of the children!

Will anyone be allowed to make money on the stock market by the time this is over?

Seems like the media are just looking for scapegoats for the current problems. Anything except admit that this is the culmination of years of rotten policy which they (the media) utterly failed to inform the public of. Quite the opposite in fact - they were quite happy to tell everyone that things were great, no problems, and just set to get even better.


BBC saying the oil rise is the biggest one day rise on record:

http://news.bbc.co.uk/1/hi/business/7630513.stm

sabretoothtigger

UPDATE: US Officials Suggest Financial Trader Behind Oil Spike
By Gregory Meyer and Ian Talley
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--As theories swirl around Monday's unprecedented jump in oil futures, government officials suggested a financial trader was responsible, though market participants suspect an oil producer may have been caught in dire need of extra barrels.
Minutes before the contract expired at the close of trade Monday, crude for October delivery surged more than $25 to $130 a barrel on the New York Mercantile Exchange, stunning traders and prompting an inquiry from the Commodity Futures Trading Commission. The contract settled up more than $16 at $120.92. But who powered the surge, or was burned by it, remains a mystery.
U.S. Energy Secretary Samuel Bodman doused suggestions Wednesday that an oil company or other commercial industry participant with a need for crude oil for delivery next month entered the Nymex futures market to secure it.
"This was a feature of the financial market ... as best I know these were professional traders in the marketplace," he said.
The acting head of the Energy Information Administration, Howard Gruenspecht, said that the outsize price move "did not reflect fundamentals." He told a Senate panel Tuesday that the most likely case was a short-squeeze, where a trader holding positions to sell crude oil at a lower price had to enter into offsetting contracts to buy oil at much higher prices. "The other option, frankly, is manipulation," he said.
The government officials' statements differ from several analysts' contention that the wild trading, which resulted in the biggest one-day price gain since Nymex crude was offered for trading in 1983, reflected an oil company that suddenly found itself short crude oil after hurricanes Gustav and Ike shut down most production in the Gulf of Mexico and barrels at the main delivery point for Nymex crude had dwindled.
Inventories at the delivery point in Cushing, Okla. fell by 800,000 barrels last week to their lowest level since November. Refineries returning to full service after the hurricanes helped pressure Cushing supplies.
Goldman Sachs analysts noted the move "reflected extreme tightness in the prompt physical market as participants that were short oil scrambled to find physical oil before expiration, which proved difficult in the context of a tight physical backdrop as refineries have been ramping up from hurricane outages amid very low inventory levels."
Others in the market said the spike stemmed from a major integrated oil company seeking to make up for production lost after the hurricanes tore into the Gulf Coast this month.
Bodman debunked this theory however, saying: "I think it was unrelated to the hurricanes," adding it was "an issue that no doubt affected the judgment of the traders."

Oil Cos Question Theory
Oil companies with a large presence in the Gulf also didn't lend credence to this theory. Chevron Corp. (CVX), declined to comment and referred questions to the American Petroleum Institute, where a spokeswoman said she had no information on the matter. A Devon Energy Corp. (DVN) representative said the company didn't comment. Royal Dutch Shell PLC (RDSA) and BP PLC (BP) didn't return calls. An Exxon Mobil Corp. (XOM) spokesman declined to comment.
A ConocoPhillips (COP) spokesman said the company "is not short crude and our system is generally balanced." The spokesman added: "While we continue to work some post storm issues our activity on the Nymex has been typical and consistent with past business practice."
Open interest, a measure of how many contracts are outstanding, after the October contract expired was the equivalent of 556,000 barrels for delivery at Cushing next month, a Nymex spokeswoman said.
In a statement issued after the market closed Monday, the CFTC said it has added the price spike to its docket as part of a nationwide crude-oil investigation first announced in May. The futures regulator's acting director of enforcement, Stephen J. Obie, said staff "will scour" trading activity to see "whether anyone engaged in illegal manipulative activity." A spokesman for Nymex parent CME Group Inc. (CME) said the CFTC has issued subpoenas in its inquiry. The CFTC declined to comment beyond its statement.
Volume in the October crude contract totaled 41,528 contracts Monday, of which more than three quarters took place on the CME's Globex electronic platform. The advent of electronic trading has made the oil markets more anonymous than the days when brokers could quickly identity a big buyer or seller calling into the crowded floor of the exchange.
The thin volume in the October contract made it especially sensitive to big market swings. It could also have accentuated the price impact of a financial trader such as a hedge fund, notwithstanding exchange rules limiting speculators' positions to 3,000 contracts in the final three days before oil contracts expire.
"The best that I know about it, it was a short squeeze," Bodman told reporters on the sidelines of an event in Washington, adding, "it was clearly not a fundamental (move)."
-By Gregory Meyer, Dow Jones Newswires; 201-938-4377; [EMAIL="greg.meyer&#64;dowjones.com"]greg.meyer@dowjones.com[/EMAIL]
-By Ian Talley, Dow Jones Newswires; 202 862 9285; [EMAIL="ian.talley&#64;dowjones.com"]ian.talley@dowjones.com[/EMAIL]
(Brian Baskin in New York, Isabel Ordonez in Houston, and Ian Talley and Sarah N. Lynch in Washington contributed to this report)
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(END) Dow Jones Newswires
September 24, 2008 16:15 ET (20:15 GMT)