and that is with a slight 'correction' in the price of oil. if the price really starts to slide, the bankruptcies will be coming fast and furious, which is to be expected with so little cash required to purchase oil contracts.

 

Yep, and that happened in the '87 stock market crash. After that the regulators changed the minimum cash margin position to 50%.

MikeyB

 

If you where speculators you would really understand. Of course most of you are not. You probably have no idea of what is going on. Speculators of our size did not do this. The big boys did and then they went broke. You and I would have had to have payed for ever. Do not stop us from having this opportunity to run with the big dogs. As I said in my previous post they should have been margined out. But they where not why?

 

Original Nymex energy traders where tied to the energy market. Either producers or big users like airlines, railroads, shipping, etc. They bidded and locked in the futures to be used later. Today new breed of speculators is only in it for the money, never to actually use the energy they're holding.

So did the 50% cash margin stop people from playing on the stock market? Don't think so.

MikeyB

 

yup, it just keeps people trading more in line with what they can actually afford...... and afford to lose. can you imagine if Vegas casinos allowed people to walk up to the craps tables, and only had to put down less than 5% of their bets in cash? if they won, everything would be fine, but when they started losing and then had to come up with the cash at the end of their trip, what do you think would happen? the same thing that's happening with SemGroup now- no cash to pay off their gambling debts.

 

Note my response back in March on this thread. https://www.dieseltruckresource.com/...d.php?t=196124

 

Sooo, can you enlighten us or is it a secret? I'd surely like to know what's going on seeing as ours is an open society. Please don't take this as a jab. I think we would all like some edification on the subject.

Are we 'drunk' on oil just like we were 'drunk' on housing, with complex systems we don't understand?

 

the loopholes that allow oil speculators to purchase contracts with less than 5% cash are not in place to help out the little guy. they are there to allow large investors (hedge funds, investment banks, etc.) to buy up large numbers of contracts, without tying up and risking large amounts of cash.
the money that they're not required to put up on their contracts in the U.S. market can then be used to purchase even more contracts on the overseas markets (referred to as 'dark markets' because of their lack of regulation, bookkeeping, and paper trails)- not exactly something the 'little guy' is involved in.

 

Good example on how the energy market is played (and should be played).
http://www.foxbusiness.com/story/mar...west-airlines/

MikeyB