People now are trading at Market’s speculation and manipulation(instead of demand and supply)

Aug.20, 2008 in Market Outlook

Speculators, per se, are not bad, nor necessarily at fault for oil market manipulation. Only the manipulators are bad. Some of the manipulators could be classified as speculators, whereas others could be classified as “commercials” according to the rules of CTFC.

Ample proof that manipulation is occurring is the fact that, when oil was not in shortage, it was rising in price, no matter what the statistics said about demand. Now, the price is falling, in spite of a real shortage (for the first time!) of 1.4% of world oil, caused by the Russian cutoff of oil through Georgia. At no time did the forecast of an overall world increase of 0.9% in oil use materially change, even with the recent slight reduction in American oil consumption.

Manipulated markets are NOT FREE MARKETS. The futures market seems to be an Orwellian double-speak market, where reality is not allowed to conflict with fantasy, and the prices are taken down to periodically accommodate financial institutions that need to escape profitably from short positions. Probably because both the spot and the futures markets are controlled by the same financial institutions, people look to the futures markets to set prices. The public, especially spot market buyers (not traders affiliated with the manipulators) need to be educated more carefully about the fact that the futures markets are a fraud.

An excellent primer that explains how manipulation is done, in the gold futures market, can be found here. It talks about downward manipulation of gold, but the techniques discussed can be equally applied to upward or downward manipulation in the oil futures market, as well.

http://seekingalpha.com/article/91357-the-disconnect-between-supply-and-demand-in-gold-silver-markets

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