Saturday, August 22, 2009

Dresdner/Commerzbank blames oil speculators

Well worth a read.....click on title.

"The significant rise in the oil price seen in the first half of the year is due in large part to a recovery in investment by financial investors. If their influence is reduced by the CFTC’s actions and sanity prevails, the oil price will fall. We expect some of these measures to be decided very soon, particularly bearing in mind that the political pressure and the desire to combat excessive speculation in the commodities markets, particularly energy markets, is growing strongly not just in the USA but also in government circles in Europe. As most investors bet on rising prices, their departure would undoubtedly tend to depress prices. Therefore we now expect the WTI oil price to fall to USD 50 per barrel in Q4 2009, rather than USD 70 as we previously thought. December WTI futures are currently quoted at around USD 75 per barrel. We have also lowered our forecast of the average WTI oil price in 2010 from USD 75 to just USD 55 per barrel. Besides the reduced contribution from financial market players, the fundamental data also indicate a slower increase in the oil price due to enormous investories worldwide and plenty of production capacity. In the absence of geopolitical tensions, there is little danger of an oil shortage in the foreseeable future. Incidentally, we do not believe that all energy will be adversely affected by the new CFTC rules, and US natural gas prices could even benefit from reduced influence by “speculators”. "

And in the comments that follow a link to this;
Chris Cook: Energy ETFs Not To Blame

"Cook: You've got these financial institutions, the so-called Wall Street refiners, that really got moving in the early 1990s: Goldman Sachs, JP Morgan, Citigroup. Their participation is purely financial, and they're in the market to make a profit. They have a financial interest in volatility, as that's where they make their money. The more volatile the market, the more money they make.....this month there's only something like 53 cargoes coming out of the North Sea for the BFOE. That's worse than it's been in years. So it only takes about $2 billion to buy them all and control them. So for someone like a BP or a Goldman, it doesn't take too many forward contracts to actually support the price."

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