The front month crude oil contract that ends trading this week is up over 10% today. Why, was there some big event? Did terrorist blow up a pipe line or something? Nope, what you got here is a classic short squeeze. The November contract is trading at $109, while this one in question is at $116. You see, a lot of these traders were riding the recent downtrend in oil. In fact, so many were figuring that oil would continue to go down, that open interest (that is all the trades that are still open and have yet to be closed) increased even on Friday! But then, all of a sudden, the November contract wasn't moving downward as much. The traders smelled something odd and soon realized all their compatriots were still short this morning on the week of expiration. So what you have is one group of traders taking advantage of another group of traders. Trader 1: Hey...I see you're still short...a lot of folks are still short. Trader 2: Yeah, gonna have to close soon, hey, you think you want to close me out? Trader 1: Heheh...sure, pal...PAY UP! Ok, it ain't exactly like that, but you get the idea.
The Economic Populist
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saw that
nice rigged game going on. I wonder if the hedge funds are the next to fall like Dr. Doom. Is this large institutional investors causing the 10% pop? Love how they are so concerned on how this all effects the rest of the economy...
just battle of the gambling gangs.
although I also wonder if it's a legitimate bet that the dollar is going down due to the massive debt being taken on.
revisit
commodity futures and speculators manipulating the markets?
I know there is about 9 bills trying to stop this but I don't know which one plain repeals the Enron loophole.
I cannot believe Congress man, they have done nothing on a host of issues which are glaring, the data is there and nope, they are busy talking to their corporate constituents and doing nothing.
You need speculators
what you don't need is manipulation. I think energy futures are one of those commodities, that while it's given that there is a market, should be extremely regulated.
right
but there are 9 different bills before Congress and I know many of them pretend to do something but actually won't.
I don't know which one is the "good" one, although I suspect anything Bryon Dorgan authored is probably a good place to start.
(gotta love how one gets 9 bills supposedly addressing the same thing yet 8 of them are Trojan horses).