Oh we got trouble. Right here in trading oil. And that starts with E that goes with T and ends in F. Oh yes we caught trouble, oh yes! We got trouble because speculation is the devil's playground.
Oil markets and speculationare under attack as the politicization of the free markets continues. Roll in your freedom folks as the government is trying to fix a problem that does not exist. Report after report exonerating speculators from manipulating the oil market have been released and to my mind proven but now a new political tenure with a predetermined mandate will convict speculators without even a fair trial. Politics takes over where common sense leaves off. If you want to prove that oil speculators drove oil prices all you have to do is find the right judge to back up your accusation. In a case of double jeopardy, speculators are tried again creating real jeopardy for the global economy. The Wall Street Journal reports that the U.S. Commodity Futures Trading Commission (CFTC) plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices. This is as the Journal points out is a reversal of an earlier CFTC position.The Journal says that, in a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on deeply flawed data quoting Bart Chilton, one of four CFTC commissioners.
Now who is Bart Chilton? Well let me tell you. According to the CFTC website, Mr. Chilton was sworn in as CFTC Commissioner in August of 2007. He currently serves as the Chairman of the CFTC's Energy and Environmental Markets Advisory Committee (EEMAC). His career spans 25 years in government service-working on Capitol Hill in the House of Representatives and in the Senate, and serving the Executive Branch during the Clinton, Bush and Obama Administrations. In other word Mr. Chilton has no special training in commodities or economics. Mr. Chilton attended Purdue University (1979-1982). He studied political science and communications. It is clear that Mr. Chilton was a political appointee by the Obama administration with a mandate to blame speculators for the move in oil. He did his job well.
If oil is being driven by speculators, then every major market in the world is being driven by speculators. If oil was manipulated by speculators then the dollar was manipulated by speculators as wild swings in the dollar matched the moves in oil. The same is true about the stock market. Didn't speculators in stocks drive prices as well?
Why just reign in speculators? Did the Federal Reserve have a hand in manipulating oil prices? Not only the Fed but the European Central Bank whose actions helped inspire some of the biggest moves oil market has ever seen. Why don't we rein those guys in?
And it isn't just oil that has caught their eye. Natural gashas been plummeting and is now getting the same treatment. Bloomberg News says that the CFTC has imposed rules on natural gas swaps on the Intercontinental Exchange tightening the so called Enron loophole that exempted the contracts from regulation. To protect the American public, it is essential that we bring transparency and accountability to the marketplace, Commission Chairman Gary Gensler said. Bringing this natural gas contract under the CFTC's regulatory authority is a critical step toward ensuring a fair and orderly marketplace.
Now do not get me wrong. I think regulationccan bea good thing as longas it does not go too far. But this is notthe case when it comes to this oil market speculation report. This is another example of those in the government thinking someone who risked his own capital made too much money and they want to make sure they have more control over who makes money. The major crime of the speculators is that some of them made too much money. No one complains when they lose money.
Will Iran come back on the oil markets radar? The New York Times reports that, strains between the United States and Israel publicly in Jerusalem, as Defense Secretary Robert Gates tried to reassure Israelis that American overtures to Iran were not open-ended, and as Defense Minister Ehud Barak expressed impatience with the Americans for wanting to engage Iran at all. Barak also said that, alluding to a potential Israeli military strike against Iran if it gains nuclear weapons capability, he added: We clearly believe that no options should be removed from the table. This is our policy, we mean it, we recommend to others to take the same position, but we cannot dictate to anyone.
Today oil is taking a break ahead of the reality of today's inventories will face traders square in the eyes.
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Sell September crude at 7170 -stop 7270.
Sell September RBOB at 19600 - stop 19750.
Sell September heating oilat 18500 - stop 18600.
We're shortSeptember natural gasfrom apprx390 - lower stop to 412.
The Dan Flynn Corn & Ethanol Report
Good Rains and growing Temps across the north Mid-West Corn region.
Inthe wake of these thunderstorms hail waspredicted which would in this traders mind be the only fear to bears.
Funds are short and fundamentals are telling us to remain short this market.
Only a Fund liquidation or technical bounce can bring more buyersto the table and change this traders bias.
The December Corn settled 2 1/4 cents higher at 336 in lastnights action. The range was 338 1/4 to 333.
I do not see much upsidehere anremain in a bearish mode.
On the Energy Front we have continued choppy trade.
With the light volume one must gather their wits and wonder why this market can't sustain a break and supply and demand factors take over.
Surely you can't blame speculators !
Or can you ?
Ispeculate lower in the U.S. Dollar and the Dow Jones which weigh
heavily in a break in the Energy Sector.