Does oil price prove lack of manipulation?

[hoosierdoc]

When the price was high it was blamed on the speculators and the rich guys rigging the markets. Well... If that were true...

why haven't they locked in their purchases at nice low levels and jacked the price back up to $100?

 

[KLB]

That was when supply was lower and demand was higher. Today the market is getting flooded and demand is down.

 

[hoosierdoc]

I realize high demand and low supply led to the high prices, I'm challenging those who blamed manipulators

 

[KLB]

I realize high demand and low supply led to the high prices, I'm challenging those who blamed manipulators

AH, well I never really bought into that. I imagine it had some effect at times, but that would be hard to pin down.

 

[Cameramonkey]

I can see SOME manipulation... Much like you can control a horse, even when she is kinda squirly. But when supply and demand are out of balance enough, its like trying to ride a wild stallion... Good luck controlling him.

 

[Twangbanger]

When the price was high it was blamed on the speculators and the rich guys rigging the markets. Well... If that were true...

why haven't they locked in their purchases at nice low levels and jacked the price back up to $100?

I don't much care one way or the other, but your second sentence does not prove that the first didn't occur. It is possible the Saudis and others are pumping so much, it exceeds even the ability of speculators to make a dent in it. The inability of speculators to make the market at a higher level of supply, does not disprove their ability to manipulate it at a lower one.

Also don't forget that speculators can find ways of making money at both ends of the price spectrum. Word now is that they're waiting for the higher-price hedge contracts of smaller U.S. production companies to expire, at which point they will have to renegotiate and start selling their production at lower prices. Speculators believe at those prices, many won't generate enough revenue to pay their debts, and the hedge fund guys will be able to pick up a slew of valuable production assets out of bankruptcy at fractions on the dollar...which they can then turn around and sell to whoever. I'm no expert, but for all I know, they could sell them to the Saudis, who might buy them just to shut them down. (We'd likely be relying on a Hillary Clinton SEC to prevent such deals from going through...and we know that woman is for sale to the highest bidder).

You can be a capitalist, and still realize that the system is rigged to hell. In fact, if the Saudis' current behavior is any guide, market manipulation is alive and well. (My personal cynical belief is that Obama's Iran deal was in part designed to help put U.S. shale-frackers out of business. Not being able to stop U.S. fracking was one of Obama's greatest environmental and economic policy misses - since he largely lacked the apparatus to shut down fracking that was occurring on private property. But allowing Iran to ship oil and gas accomplishes the same thing, through different means).

 

[oldpink]

Given the complexity and multiple influences on the energy market, I've never bought the idea that there is an industry-wide market manipulation of the petroleum market, especially gas prices.
Yes, the Saudis engage in some manipulation, but that's the result of their corner of the market being a near monopoly, and their influence is still nothing like it was in the 1970s in the heyday of OPEC.
Also, I'll be the lone voice speaking out in support of the much maligned (and unjustly so) speculators, who perform a valuable function by stabilizing the oil market such that it doesn't fluctuate any more wildly than it currently does.
Anyone who really understands commodity markets will calmly explain that speculators (a more proper term is "buyer" or "stockholder," btw) are a net benefit to a given market.

 

[Kutnupe14]

Of course there is market manipulation, and it starts with the producers. Surely no one is so naïve to believe that the powers tha be dangle carrots to influence producers. The Saudi's letting oil flow freely (despite it being in their best interests), to stick it to Russia, is a perfect example of this.
And now Iran is in the game too, possibly add one MILLION barrels a day? C'mon guys.

 

[2ADMNLOVER]

The Saudi's letting oil flow freely (despite it being in their best interests), to stick it to Russia, is a perfect example of this. And now Iran is in the game too, possibly add one MILLION barrels a day? C'mon guys.

Along these lines , currency wars and trade wars give us world wars

 

[shibumiseeker]

Speculation and market manipulation gave us high prices, now it is giving us low prices. As far as speculation goes, money is made either direction in the market. When the market was opened further to speculation back in the early 2000s it led to futures trading on a scale not seen before and at the peak was responsible for perhaps a third of the cost of oil. At the same time the real market (consumption and production) was at a low for production as proven fields were declining and OPEC was putting the squeeze on us and demand in the form of China's rapid economic increases led to a wild imbalance. The high prices led to new technologies to allow production to ramp up and the major new production came online at the same time demand fell because of increases in efficiency, changes to alternative forms of energy, and China's economic stagnation. That combined with a change in geopolitics to the point where OPEC's squeeze was no longer advantageous.

So yes, speculation and manipulation is alive and well, and for a little while it will benefit us little people while the other big market players rape each other for a spell instead of us and the global politics makes the OPEC boys trying to influence someone else, and China enters a recession. But just about the time that Joe and Jane American decide that gasoline is cheap enough that they'll go back to the urban assault vehicles with the 40 gallon tank and 12mpg because once or twice a year they might actually take that behemoth off pavement and onto a well graded gravel road, the pendulum will swing the other way and all those factors above will combine to screw us little people again.

 

[IndyDave1776]

I believe it would all make more sense if we would stop looking for a central clearinghouse on market manipulation and start looking for multiple factions of manipulators essentially playing paper, rock, and scissors with each other and screwing up conventional supply and demand in the process.

 

[BugI02]

....... But just about the time that Joe and Jane American decide that gasoline is cheap enough that they'll go back to the urban assault vehicles with the 40 gallon tank and 12mpg because once or twice a year they might actually take that behemoth off pavement and onto a well graded gravel road, the pendulum will swing the other way and all those factors above will combine to screw us little people again.

Capitalism was never designed to protect one from the consequences of ones actions. In fact it is quite the reverse.

 

[HoughMade]

Of course there's price manipulation. It's right out in the open and it based on supply and demand.

OPEC produces less, price climbs. OPEC produces more, price drops. Develop domestic oil? The supply is greater (price starts to drop) and then OPEC produces more to make North American oil comparatively more expensive (price drops more). Market starts liking electric cars, and you drop the price of oil to make gasoline either cheaper than electricity or, as always, more convenient for the cars the average guy drives.

Average guy drives a bunch of trucks and SUVs that get bad mileage, demand grows and so do prices.

No secrets and plenty of price manipulation.

 

[oldpink]

Of course there's price manipulation. It's right out in the open and it based on supply and demand.

OPEC produces less, price climbs. OPEC produces more, price drops. Develop domestic oil? The supply is greater (price starts to drop) and then OPEC produces more to make North American oil comparatively more expensive (price drops more). Market starts liking electric cars, and you drop the price of oil to make gasoline either cheaper than electricity or, as always, more convenient for the cars the average guy drives.

Average guy drives a bunch of trucks and SUVs that get bad mileage, demand grows and so do prices.

No secrets and plenty of price manipulation.

Bingo
Rep inbound

 

[BehindBlueI's]

You don't think the market is being manipulated now? There are winners for low prices, too. Particularly producers who can ride it out while competitors shut down, have their currencies crash, etc.

It would be interesting to see how much automated buy/sell orders have played in as well. Remember the biggest buyers of oil are companies without the ability to accept the orders...they are just middle men.

 

[BugI02]

You don't think the market is being manipulated now? There are winners for low prices, too. Particularly producers who can ride it out while competitors shut down, have their currencies crash, etc.

It would be interesting to see how much automated buy/sell orders have played in as well. Remember the biggest buyers of oil are companies without the ability to accept the orders...they are just middle men.

+1 BBI. Big problem IMO. Would like to see the bar set at the ability to take delivery as a requirement to play ( not just oil but any commodity )


Rep on the way

 

[SSGSAD]

Of course there's price manipulation. It's right out in the open and it based on supply and demand.

OPEC produces less, price climbs. OPEC produces more, price drops. Develop domestic oil? The supply is greater (price starts to drop) and then OPEC produces more to make North American oil comparatively more expensive (price drops more). Market starts liking electric cars, and you drop the price of oil to make gasoline either cheaper than electricity or, as always, more convenient for the cars the average guy drives.

Average guy drives a bunch of trucks and SUVs that get bad mileage, demand grows and so do prices.

No secrets and plenty of price manipulation.

I agree with all that, 100% !!!!!

 

[Hoosierkav]

Since OPEC has been the one controlling the flow for decades (as Houghmade mentioned), could there be a domestic angle to this? That we/non-OPEC producers would benefit from flooding the market, thus negating the need for OPEC? Is OPEC really losing in this current market?

I am skeptical that all this fracking suddenly produced an overwhelming glut of cheap oil, threatening to put the fracking system out of business because the returns aren't there...

 

[HamYankee]

I read the Saudis are trying to destroy our fracking industry, thereby increasing our dependence on oil imports. When oil prices are very high, I think that is manipulation too. USA is under attack on many fronts.

 

[Fawkes]

There is all kinds of market manipulation, but what this wild market whipsaw proves is the basic reality of economics. The artificially high price of gas gave incentive to small and medium producers to frack and do whatever to produce to take advantage of the fat profit margins offered by the market. When those new producers were successful the glut of oil forced the market to lower prices. I agree with earlier poster that stated that the big OPEC producers/Russia are purposely continuing production in the face of losses to drive the smaller producers out of business.