ingresa dentro de las consideraciones del mercado y se torna “colectivo” de una forma mágica, propulsado en el fondo por toda una maquinaria financiera que está lejos de los números reales de demanda y oferta del crudo. En el camino, se genera una volatilidad en los precios a la que solo le sacan provecho los pocos informados que tienen la facilidad de aprovechar la subida y la baja para negociar en ventaja, en el momento indicado. El costo colateral es que en ese mismo proceso, sí se altera la condición corriente del bien en cuestión --en este caso el petróleo crudo (spot)-- en detrimento de quienes negocien el petróleo crudo (spot). La magia de “ganancias” especulativas no es más que el traspaso de dineros pagados por consumidores por un petróleo crudo más caro. No se ha creado riqueza, ni beneficio; solo se ha vendido un “rumor” futuro, retocado con “miedo” y descontado al presente. La cuenta, hasta ahora, la ha pagado el consumidor. Ver nuestra siguiente entrega...
Who control oil prices? Part II In our October 2009 issue, we discussed this fascinating topic (for more details, visit www.revistatransports. com) Let’s continueThe role played by international oil markets in London and New York is crucial in understanding the involvement of the financial system in the process of manipulating and determining oil prices.
F
irst, New York’s Nymex, the world’s largest commodities exchange market, was publicly traded in 2006’s New York Stock Exchange as Nymex Holdings (Symbol: NMX), and less than two years later was purchased by Chicago Mercantile Exchange (Symbol: CME). Secondly, London’s ICE Futures, formerly London’s International Petroleum Exchange, is among the largest markets for future energy options. Purchased in 2001 by the Intercontinental Exchange, it was publicly traded in the New York’s Stock Exchange under the ICE symbol. Thirdly, the recent inception of an oil exchange trade market, comparable to above mentioned, the Dubai Mercantile Exchange (DME), is the premier exchange market for future energy contracts and Middle East merchandising. Its main stock holders are Tatweer, a member of Dubai Holding, the Oman Investment Fund (OIF), and the CME Group, mentioned above. Each stockholder shares approximately 25% of DME’s net assets. In August 2008, DME announced the availability of an additional 20% of its net assets. Among the subscribed companies are the top energy providers and “blue-chip” financial institutions, such as Goldman Sachs, Morgan Stanley, Shell, Vitol, Concord Energy, and Casa Trading. JP Morgan joined the group in October 2008. These are the same blue-chip financial entities that are now majority stockholders of Nymex and ICE, making them -in essence- beneficiaries of the intermediation platform of merchandising and oil futures. These three markets and their negotiation platforms currently control global reference oil prices, and in turn trade the majority
of the openly negotiated oil volumes. This is achieved through future oil contracts and two reference vehicles: 1) The North Sea Brent is used in future short and long term contracts to find a value level to the oil produced in the global oil market on a daily basis. The Brent’s daily volume price is a trivial reference value for the European market and, to an extent, the Asian market. Leading oil producers use the Brent as a guideline in establishing prices for the crude oil they produce. 2) The WTI (West Texas Intermediate) has been, throughout its history, more than a point of reference for the North American crude oil prices; it serves as the guideline for most the United States’ oil production. All the above is part of the official structure of industry participants, state and self regulated. We have described oil companies, stock exchanges of physical and future goods, and financial institutions which are involved in the intermediation of future contracts, contracts that derive their value from the negotiation of assets to be delivered on a previously agreed upon date, and a price and a volume previously agreed upon as well. Now, finding out exactly how current oil prices are determined, requires an obscure analytical process that only a few of the great financial institutions such as Goldman Sachs, JP Morgan, Morgan Stanley, among others, know exactly who buys and who sells oil futures or derivate contracts. This happens today in a new operational frame in which “future” oil prices determine the prices of the oil physically available today (spot) by means of “synthetic” instruments, derivates or what is known as “paper oil”. Today, there is a strong trend proposed by representatives of regulating entities, as well as some financial and economy scholars who believe that control of oil prices no longer belongs to the OPEC, the new Seven Sisters or the Super Majors; it now belongs to Wall Street. For Wall Street, the development of unregulated international derivatives trading in oil futures, which began in 2006 and continue experiencing today, is the reason for the present speculative bubble in oil prices and its current deflation. Given the popularity of the negotiation of oil futures in the top two leading markets, London and New York, the financial negotiation platform is quite vulnerable to the “Buy the Rumor, Sell the Fact” philosophy employed to negotiate other commodities sold by the current spot. Unlike future contracts, this can be more sensitive to collective speculation. All it takes is a rumor - spread by entities with influence over future crude oil prices - and we’ll automatically witness how those same future contracts impact current oil prices (spot). It is almost unbelievable how something “synthetic,” that comes from an unknown and unpredictable future can influence the price of something tangible and physical in the present. Yet in real life, it happens every day. A simple example could be a rumor in the news about a possible oil shortage and increased oil process as a result of basic supply and demand. This notion is internalized by the market and becomes collective knowledge, which in turn sets the financial machine in motion regardless of the reality – and its numbers – of oil supply and demand. Along the way, there is price volatility, which is used to the advantage of the few in the know, who make the most of fluctuating prices in order to negotiate with an edge when the time is right. The collateral damage is that in that same process, the commodity’s current situation is also impacted -in this particular case, crude oil (spot) – much to the disadvantage of those trading in crude oil. The magic of speculative “earnings” is nothing but the transfer of the money paid by end consumers for more expensive oil. Nor wealth nor benefits have been generated; only a future “rumor” has been sold under a mask of fear, a discount to the present. And so far, consumers are picking up the tab. More on our next issue...
45