[lbo-talk] speculative fever in oil

brad babscritique at gmail.com
Wed Mar 9 05:37:20 PST 2011


"A report by the underfunded Commodity Future Trading Commission (CFTC) was released on Friday. The numbers it includes represent the internal organs of the futures’ market and are akin to “inside baseball” statistics. The stats are tough to explain to anyone but futures’ stats geeks. Trust me, however, when I report that the CFTC data shows the highest speculative buying skew in the history of oil futures and options.

The big financial funds - - be they cowboy trading pools, exchange-traded-funds (ETFs) that mimic futures prices, or sleepy behemoth index funds that invest money each month in various energy contracts - - have never had such a colossal position. Simply put, the funds are living large, and living mostly on the long side of the market.

The means by which overall participation in futures and options is measured comes through open interest statistics. . The NYMEX open interest number climbed last week by 183,668 contracts to 2,940,658. The long position (bets on higher price outcomes) for what the CFTC calls non-commercial traders (big funds) surged by 49,202 contracts to a record-shattering 430,118 contracts, each of which hypothetically reflects 1,000 bbl worth of crude.Meanwhile, big funds pared their exposure on the short side, and the total short position slipped by 6,392 positions to 94,444 contracts.

The long and the short of it is that there is a net buying bias among mostly financial funds that represented a record-smashing 335,674 contracts or nearly 335.7-million bbl worth of crude. Attaching a hypothetical value of $102 to each barrel of crude means that among speculators and financial investors, there is a buying bias of about $34-billion. "

http://blogs.opisnet.com/archive/2011/03/08/living-long-large-in-the-days-of-rage.aspx

Ed Shultz has also been all over this on his MSNBC show.

Brad



More information about the lbo-talk mailing list