“Ironically, hedge funds trading oil are not doing anything very different than the large investment banks such as Goldman Sachs, Bank of America, or Morgan Stanley already do. The proprietary trading desks of these and other large investment banks are actually ‘hedge funds in drag,’ just as Enron was.†–Peter C. Fusaro and Gary M. Vasey, Hedge Funds Change Energy Trading
bill cara did a write-up of the senate subcommittee report THE ROLE OF MARKET SPECULATION IN RISING OIL AND GAS PRICES: A NEED TO PUT THE COP BACK ON THE BEAT (PDF). phil davis did an analysis as well. for an alternative view, read the EIA report on why oil prices are so high. you should read the report and those analyses if you are interested in what may prove to be the next enron-style scandal, only much bigger. player of note: t boone pickens, who among other things donated $3MIL to the swift boat veterans for truth, and who has been pulling down billions in the last several years while pounding the table on peak oil.
i sold penn west (NYSE: PWE) this morning, not on the basis of this alone (EIA weekly inventory was up this morning, and GDP surprised downwards, adding more data to the argument for a slowdown). weighing in favor of holding was the iran deadline tomorrow, but the risk of the bottom falling out of oil has been bothering me more lately.
demand is going up, supply is going up. if the economy keeps slowing down, and i consider that the more likely case, then demand acceleration is going to slow as well. more to think about.
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