Great argument on Squawk this morning, Santelli and Jack Bouroudjian. I'll try and post it later.
but about oil...
My argument is more a fundamental one... If I buy an oil contract Long either a futures contract or ETF... it creates Demand for the Contract, and oil. therefore drives the price up. That I had money and turned it into oil... drives the price up.. As if I buy a futures contract in the S&P, If I put my good hard cash into something, it has to drive the price up... that is how markets work.... You can't believe in markets if you believe that somehow I buy or sell something, and it has no effect on the price....... That is ASSHATERY.
Oil can go to a million on speculation.
Friday, June 27, 2008
Supply and Demand
Subscribe to:
Post Comments (Atom)
2 comments:
I think I understand the futures contract idea. Santelli is saying that commodity contracts need to be settled and the near term contracts are representative for what refiners are paying for the barrel oil price. This is not speculative, this is real demand.
If the Saudis or Chavez in Venezuela had more oil, they would surely be flooding the market at this price.
I cannot wrap my mind around Perigian's argument about speculators running the price up. Eventually the contract must be settled.
Are you saying Santelli's argument is wrong?
Shit, I had a huge response and lost it.... Damn blogger.
wall street has a way of getting around stuff.
and Yes, the piper will have to be paid... but how long did it take for CDO's? 5 years.
If I buy something, it increases demand, if demand goes up. Price goes up. That is the Essence of markets.
It's unfathomable to me.. that somehow, I buy a futures contract or an ETF and it won't have an affect on price... Markets don't work that way...
And if you look at the back month Crude contracts, they are being purchased like mad...
Oil moves .50 in a day not 15.00. All my mojo says this is speculative...
I can grant some move to my Thesis on Chinese oil demand for the Olympics.
this week we saw a surprise build.. and I'm betting they will continue.. and at one point in the next weeks, I think oil could crack, and all that spec money will come out... and when the ETF goes Plunging down $30 you will see some very Crowded exits.
I'd be curious to see what happens with the ETF's if that happens, and they try and dump Shitloads of contracts in the course of 2 hours.
also on a chart, as it makes smaller and smaller highs, it seems toppy to me...
Not like it would be the first time I was wrong.
Obviously the market is trying to price in 5.50 gas.. but if oil goes to $200.. we will start talking about 10.00 gas
Post a Comment