CME hikes oil, gasoline margin requirements

derryb

Lets see how many margin hikes (and how quickly) it takes for the FOMC to get the price of this commodity where they want it. They learned a new price busting trick with silver, lets see how far they can stretch it.

Just in at Market Watch:
"U.S. exchange operator CME Group said Monday it is raising the margin requirements for trade in a wide range of oil products, effective Tuesday. The requirement for a new position in benchmark New York Mercantile Exchange crude contracts rises to $8,438 from $6,750 previously, with margins also higher for contracts in benchmark Brent crude, gasoline and other products. The hike was the first of its kind since March 4, according to TheStreet.com. June crude oil traded at $101.95 a barrel early in Tuesday's electronic session, down 56 cents, or 0.6%, from the close of floor trading Monday on the New York Mercantile Exchange."

akuracy503

Shall we see a nice correction in oil futures tomorrow?

DTO short play anyone?

Wingsrule

I'm sure the conspiracy theorists will propose that JPM and others 'made' the CME do this to help cover their tracks on the silver margin hikes of late.

derryb

<< <i>I'm sure the conspiracy theorists will propose that JPM and others 'made' the CME do this to help cover their tracks on the silver margin hikes of late. >>


No, we're more realistic on such matters. We know the FOMC pressured CME to do this to reduce speculation (free market activity) which holds the commodity price down (price control), which in turn leaves the FOMC's investment favorites, treasury bonds and equities, more favorable with investors. It's really all about directing the flow of investment funds to keep select markets propped up. To prove my point, keep an eye out for margin requirement increases with other commodities.

7over8

"Reduce Speculation"

So why don't the regulators prohibit excessive short selling?

derryb

<< <i>"Reduce Speculation"

So why don't the regulators prohibit excessive short selling? >>



Define excessive. CME did - by raising margin requirement to a certain amount. Their definition of "excessive" will change with next margin hike.

Regulators enforce regulations. No regulation against "excessive" short selling. You control it by setting higher margin requirements.

roadrunner

Silver's 5 hikes in two weeks no doubt gave the warning to players in all other commodities that they would probably next on the list. Hence the sympathetic crashing
of most commodities last week. Thing is, it's only a temporary reprieve. The real prices of commodities will still go to their intended long term targets regardless of
the number of rate hikes that get imposed. For many key commodities the Comex is no longer a means to price discovery, but one of manipulation and fraud.
True supply and demand for the real product will still steer the price to wherever it's going.

To look at silver's truer supply/demand price chart eliminate 2008-2009 and the last few months of 2011.

roadrunner

57loaded

Hong Kong Merc to offer 1 Kilo Au contracts a death knell to the COMEX "Monopoly"?

from the link

"Far more importantly, the Comex monopoly appears to be over, and going forward the exchange will have to be far more sensitive about angering broad swaths of the population using 5 consecutive margin hikes in 9 days. The new exchange will also make the now traditional "banging the close" operation (or "banging the whatever" as the May 1 15% drop from $49 to $42 in minutes demonstrated) obsolete, as traders will have options of where to route orders from the hours of 0800 HKT to 2300 HKT."

percyb

<< <i>"Reduce Speculation"

So why don't the regulators prohibit excessive short selling? >>



There's no political currency in that right now. They get on the short sellers only when prices go down.