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Governments Nudging Fuel Prices?  
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5215 posts, RR: 7
Posted (5 years 10 months 1 week 3 days 6 hours ago) and read 1275 times:

Buried (even in the WSJ it was on page C7) are some reports today that Washington and London are discussing limiting speculation in front month oil contracts. The report alone should chase some speculators out of the market.

Limiting this intervention to the front month could presumably make those prices move less erratically for actual users of the commodity while leaving more distant months' contracts for the market speculators to price as they will.


Consilivm: Cave ne nothi te vexant
4 replies: All unread, jump to last
 
User currently offlineEXAAUADL From , joined Dec 1969, posts, RR:
Reply 1, posted (5 years 10 months 1 week 3 days 6 hours ago) and read 1270 times:



Quoting MasseyBrown (Thread starter):
Buried (even in the WSJ it was on page C7) are some reports today that Washington and London are discussing limiting speculation in front month oil contracts. The report alone should chase some speculators out of the market.

I do think speculators should be limited, mostly by raising margins. That might cause some money to go to Dubai, but the way to go after that would be to raise the taxes of investors, in this case US investors, who dabdle in commodities markets.......speculators are part of the problem but ask yourself why werent there speculators like this 10 years ago.

1. CFTB allows more speculators in
2. spare excess capacity is lower today
3. US interest rates too low.


User currently offlineLAXintl From United States of America, joined May 2000, 24324 posts, RR: 47
Reply 2, posted (5 years 10 months 1 week 3 days 6 hours ago) and read 1252 times:

Dumb idea, and needless government intervention in the market.

Anyhow it ridiculous to want to strangle market efficiency in reacting to good or bad events which would effect commodity pricing.

If front month pricing is more restrictive, I can very easily see sellers holding back capacity during times such as now where future month pricing might drive a larger premium. Basically why commit to selling for X in July, when you can get X+ in August as the market has been dumbed down in its ability to react to day to day events for the front month in pricing.



From the desert to the sea, to all of Southern California
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5215 posts, RR: 7
Reply 3, posted (5 years 10 months 1 week 3 days 5 hours ago) and read 1250 times:

Quoting EXAAUADL (Reply 1):
I do think speculators should be limited, mostly by raising margins.

That's the easiest and most efficient way. The risk is undermining the primacy of the NY and London markets; overly fragmented trading will make the market even more erratic.

A sharp, brief intervention with the threat of repetition might be just the ticket. The "free market" is not a suicide pact, to reapply the old saying.

[Edited 2008-06-13 08:02:18]


Consilivm: Cave ne nothi te vexant
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5215 posts, RR: 7
Reply 4, posted (5 years 10 months 1 week 2 days 15 hours ago) and read 1090 times:

Times of London reports UK government is unenthusiastic about the CFTC's proposal.

http://business.timesonline.co.uk/to...tural_resources/article4124552.ece

citing "free market" concerns. A subsequent article suggests that London is more worried about losing the market than how free the trading is.

http://business.timesonline.co.uk/to...tural_resources/article4132850.ece



Consilivm: Cave ne nothi te vexant
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