Optiver Holdings, First Of Many Oil Speculators Charged

While the Commodity Futures Trading Commission denies that oil speculators are a significant factor in the surging price of oil, they have been going after speculators with a vengeance lately. Today they snagged their first by charging three top executives of Optiver Holdings. Apparently they were successfully manipulating the price so that they bought big at the end of the day to drive prices up and then sold big to make it go down again.

From CNN:

The Commodity Futures Trading Commission accused Optiver Holding, two of its subsidiaries and three employees with manipulation and attempted manipulation of crude oil, heating oil and gasoline futures on the New York Mercantile Exchange.

"Optiver traders amassed large trading positions, then conducted trades in such a way to bully and hammer the markets," CFTC Acting Chairman Walt Lukken said at a press conference. "These charges go to the heart of the CFTC's core mission of detecting and rooting out illegal manipulation of the markets."

In May, under the backdrop of record oil prices and calls from legislators to crack down on speculative oil trading and market manipulation, the CFTC announced a wide-ranging probe into oil price manipulation. The agency says it has dozens of investigations ongoing.

The complaint filed Thursday names Bastiaan van Kempen, chief executive; Christopher Dowson, a head trader; and Randal Meijer, head of trading at an Optiver subsidiary.

Of course there are plenty of factors that are used to determine the price of oil. A hurricane, a war, supply and demand....they're all important. Yet Optiver is just one of many speculators out there (I'm fully confident, as is the CFTC, that there will be more illegalities found) messing with the market and ultimately the price of a gallon of gas. All of them should be prosecuted to the fullest extent of the law, like all the corporate crooks out there.

Oil Traders: "Trust Us," Congressional Aides: "Yeah, Right"

Washington would be far more dull if there wasn't splashes of humor intertwined in the lobbying done by the very wealthy. No group is more powerful than the collective interests on Wall Street and the best product out there for them is oil, especially with a barrel of oil surpassing $140 and gas prices surging past $4. With the American public screaming for something to be done, Congress (controlled by Dems) is looking to do something and oil traders are in their sights. Of course those with the oil money doth protest, so let's take a look at their strategy of "not me."

From The Washington Post:

Representatives of Goldman Sachs and Morgan Stanley, along with the trade associations for hedge funds and other financial groups, have lobbied the offices of key legislators, briefed senior staffers on committees that oversee pivotal parts of the energy markets and distributed research materials explaining their view about oil and how it's traded.

In a pair of lengthy and sometimes testy closed-door sessions in the Senate last week, executives from Goldman Sachs and Morgan Stanley, two of Wall Street's largest investment banks, made the case that their multibillion-dollar investments in energy contracts have not led to higher oil prices. Rather, they told Democratic staff members of the Energy and Natural Resources Committee that the trades allow international markets to operate efficiently and that the run-up in oil prices results not from speculation but from actual imbalances of supply and demand.

But the executives were met with skepticism and occasional hostility. "Spare us your lecture about supply and demand," one of the Democratic aides said, abruptly cutting off one of the executives, according to a staff member in the room.

Another aide at the meetings warned the executives that no matter what arguments they muster, it would be hard to prevent Congress from acting. Referring to a vote earlier this year to impose new mileage standards on automobile makers, the aide said, "At 90 bucks a barrel, Congress rolled the autos for the first time in 30 years -- is it too much to think that Congress will impose more restrictions on you if oil goes to $150 dollars a barrel?"

Wow, those aides are tough talkers, but can their bosses act decisively so that Wall Street is effectively regulated? The public has had enough of the status quo and the ridiculous profits that are made by a select few in the energy market.

Supply and demand certainly has an effect on the market price, but without the speculative practices of Wall Street, oil would be at the most half of what it is trading for right now. Oil companies and those that work the contracts are making way too much money at the public's expense.

There's More To The Price Of Oil Than Just Supply And Demand

The Commodities Futures Trading Commission has taken the extraordinary step of coming out with an investigation of oil traders who are suspected of manipulating the market in order to make unconscionable amounts of money at the expense of the American and even world economies. Now it is great that high oil prices get people to switch to mass transit, but if the CFTC can prove there was criminal wrongdoing, the bastards involved should face a long, long prison terms.

From The Washington Post:

The CFTC said its investigation started in December, before this latest surge in prices but after an earlier surge that took oil prices over $90 a barrel.

Congress has been pressing the CFTC to take tougher action to stop what lawmakers call "speculation" -- which is not illegal -- and possible unlawful manipulation of oil markets. Some lawmakers have suggested that the commission discourage speculation by increasing margin requirements so that traders would have to put up more cash to buy positions on commodity markets.

The CFTC said that in addition to the investigation, it had reached agreements with British and European regulators to share more information about oil markets. It also said it would take steps to increase transparency by getting more information from index traders and other financial players.

It was unclear whether the commission's announcements were a reaction to congressional pressure, but they were praised by many lawmakers. Rep. Edward J. Markey (D-Mass.) said he was pleased, adding that "the CFTC must vigorously pursue all leads to protect the American people from market manipulation during a time of record prices at the pump."

The real question is whether if/when the CFTC finds wrong-doing, will Congress take the appropriate actions and deal the oil industry the crushing blow that it deserves? ExxonMobil, ChevronTexaco and the rest have been figuratively raping America right along with their trader friends on Wall Street. Enough is enough, the people demand action and simply talking about how bad they are won't cut it.