Oil, Gas, Energy

The Big Banks Secret Oil Play: Why Oil Prices Are So Low24 min read

Comments (16)
  1. Merrick Finn says:

    Hello Ivan,
    I must say in all my years of studying and observing bank manipulation (through concentration of short or long positions) of precious metals; gold and silver markets, your article was the one that clinched it for me with respect to oil. What you have reported makes complete sense. The banks never loose…..this is true in gold and silver markets as well. GATA (Gold Anti-Trust Action Committee) the premier group exposing the manipulation of the CFTC gold and silver markets. From what I understand JPMorgan has amassed a tranche of silver totalling 250 Million oz. all the while suppressing the price since Aug 11 from $48 to under $14. Please check out http://www.gata.org for details.
    Regards,
    Merrick

  2. SS says:

    Although I don’t doubt the big banks have some involvement and you are right they don’t seem to lose. Or lose very little anyway. I think some of this story is a little fantastical. It would take quite a concerted and coordinated effort by all these banks to come close to anything like what you are talking about. And if as you say this is some effort by these banks to grab control of everything why wouldn’t the banks and countries dependent on oil manipulate the markets in their own? As you assert the know this is happening.

    These banks have zero interest in owning any of these assets. Especially oil and gas. Reserves in the ground are worth very little. And these banks have no idea how to run these businesses.

    You also assert somehow that it is only recently that oil had traded erratically. Which is utter nonsense. In 1998 before these regulations you talk about oil trade down to $10/bbl. and it has done so quite often over the course of history. Now I don’t doubt that there is a power struggle taking place in the world. But to say that the banks in the US could manipulate a commodity like oil as drastically as they have is a bit far fetched.

    While Oil “demand” is apparently rising. We are still producing more than the world is demanding. That is why the price is going down. It doesn’t have to be a lot more complicated than that. As far as this rising demand is concerned all these countries, I’ll use China as an example are buying more oil than they need and putting it in storage. This isn’t true demand. As of last fall there was reports of as many as 3 billion BBLs of oil in storage around the world. And this likely doesn’t include strategic supplies such as the US govt maintains. So the world is literally swimming in the stuff. With more being brought online all the time.

    The reason the banks aren’t concerned is because they don’t ah e to be. You are correct in that they will be bailed out by the US govt. If it can afford to this time. No different than when they lost billions in the last fiasco.

    1. James says:

      You are very blinded. The report included in this article is from the US senate committee of investigations, which clearly shows the manipulation of prices by speculators.

      The problem with society is that we are so blinded by what’s really going on that when something like this is uncovered, we think it’s fanatical.

      Do you realize how many times the big banks have gone into emerging markets to facilitate trades of major natural resources assets, after they take control?

      Open your eyes.

    2. Frankie says:

      Your statement: the banks have no interest in this stuff is the most absurd thing you can say. How can you say that?

      Did you not read?

      “Until recently, Morgan Stanley controlled over 55 million barrels of oil storage capacity, 100 oil tankers, and 6,000 miles of pipeline. JPMorgan built a copper inventory that peaked at $2.7 billion, and, at one point, included at least 213,000 metric tons of copper, comprising nearly 60% of the available physical copper on the world’s premier copper trading exchange, the LME.

      In 2012, Goldman owned 1.5 million metric tons of aluminum worth $3 billion, about 25% of the entire U.S. annual consumption. Goldman also owned warehouses which, in 2014, controlled 85% of the LME aluminum storage business in the United States.” – Wall Street Bank Involvement with Physical Commodities, United States Senate Permanent Subcommittee on Investigations”

  3. Economics graduate says:

    I believe the wisdom is that DEMAND increases when prices fall, not SUPPLY as stated in this article

    1. Peter says:

      You have to love the idiots that common here thinking they are smart.

      READ carefully: The law of supply states that the quantity of a good supplied rises as the market price rises, and falls as the price falls. Conversely, the law of demand states that the quantity of a good demanded falls as the price rises, and vice versa.

      “Quantity of good supplied” not supplies. That means the quantity of a a good supplied falls as price rise.

      Seriously people, don’t make comments correcting others when in fact, your correction is wrong.

  4. Ivan Trujillo says:

    You are obviously using a very personal and political context. And forgetting a big side of the formula.
    You cannot just said demand has peaked and assume that across the years the amount of users is constant.
    In the other hand, you are not mentioning that oil as a commodity has substitutes, which demand and use has increased among the years, e.g. natural gas, renewables, P2G, etc. this affects directly the price of oil and people’s dependency to it.
    You should not assume conclusions while not analyzing the whole equation.
    Now let’s assume your theory is true.
    What about big banks abroad US? HSBC 2nd biggest bank in the world. or deutsche Bank? or national banks in countries where oil is the main source of wealth. Are they not involve in anyway? hard to believe to me, if what you said is true.
    Am sorry but your story sounds more like full of political position than any economic sense.

    1. Peter says:

      You’re exactly the sucker that believes that oil isn’t manipulated.

      Oil has substitutes…perhaps you don’t realize that oil use is growing and has never been higher! So how does oil drop 75% in a few months? Oh right, somehow electric cars replaced 75% of gas cars…

      When you make comments, you should probably my do some research or you end up sounding stupid.

      Also, if you perhaps actually read this whole article, you would see that the price manipulation theory was actually underlined by a report from the United States Senate Comitee of Investigatioms- it’s not conjecture.

      There’s a sucker born every minute…

  5. Ivan Trujillo says:

    Fella, You won’t be lauder nor loved by insulting others. It is just a different opinion. And yes, I believe in price manipulation in the market. But do not share many part of the thoughts expressed in the article

    Anyway have a lovely day fella.

  6. Chris says:

    So how does a middle class american invest to protect themselves? Do they buy gold? How are you Evan?

  7. chris goodwin says:

    Such large figures, it clouds my judgement. So lets get out of dollars, and look at the amount of crude.

    A big bank has $750 million. Sounds a lot: more than I have in my current account, say. But hey, it’s a Big Bank, so what is 750 million ? If oil is selling at (say) $30/barrel, then the bank owns 25 million barrels. The world consumes 90 millian (roughly) barrels per day. So the bank could supply the world for about three hours and twenty minutes – more or less, all after my estimates are a bit off. This does not make the Bank a BIG SUPPLIER, they are a fringe item, a rounding error. They may want, or seek, to manipulate the price, but we are looking at a flea pushing an elephant. At $30 per barrel, 90 million bpd average, and this is a leap year, (so what !) this means annual crude sales of just under a trillion dollars: which is peanuts. (But of course, not for me: so if anyone would like to make a small contribution to my survival expenses, then just 1% of 1% of 1% of that $988,200,000,000 would be most welcome.)

  8. mike sevel says:

    no i think the saudis are controlling the market pumping as much as possible to put north american oil companies out of business

  9. Interesting ideas and credible. Meantime, due to lower gas prices, here goes the US dimwit consumers back into the showroom buying SUVs and other gas guzzlers! There is no hope with this kind of irresponsibilty. The last climate change world meeting, leaders vowed that world temps had to be kept below 2*C warmer than now. Even that is making for wilder weather and here we have the bimbos and himbos la dee dah dee dah going on as if there is no consequence to their self-absorbed actions. Hopeless and so pathetic. If there was a case for National Security to be invoked – this would be it – no more drilling of any kind for fossil fuels – there is already more in storage and tapped into than can be used anyhow. Big oil has been the cause of immense damage to the world and it is likely too late to reverse it but as long as the narrow-minded, idiotic Kochs et al get a few more billion in their bank accounts all is just rosy!

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  10. Ofay Cat says:

    ‘Nothing is ever what it appears to be’.

    I am more concerned about what’s on Netflix than I am about world monetary affairs. I have zero control … It is all so corrupt and distorted that there is no point in trying to plan you life on the bogus information we are fed by the spoonful every day. That applies to pretty everything reported in the MSM and in universities. I have opted for the parochial life-style that is pleasant and peaceful. Yes … jettisoned concern for everything is rewarding.

    Why am I here reading this stuff today? I do that occaionally to remind myself why I quit.

    And just for fun … Go Trump!

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