This AP article establishes the impact of Hedge Fund speculation on the Oil Pricing system. Light, Sweet Crude is up $1.03 per barrel, though Refining capacity has increased, and Crude Oil importation has remained relatively Constant. The 1.4 million barrel Crude Oil decline at Cushing means relatively nothing; with no Change in importation levels, replacement Crude is already in the Delivery pipeline to Cushing. Where is the reduction coming from? Higher production of Gasoline (up 800,000 barrels) and Distillates refining on Schedule (1.5 million barrels rather than the expected 730,000 barrels). Yet Heating Oil, Gasoline, and Natural Gas futures are all up; it seems Consumers are expected to pay for peak Refining performance.
The Dow Jones Industrials dropped 1.77% in morning trading, S&P 500 lost 2.09%, and the Nasdaq Composite Index went down 1.88%. The Russell 2000 Index lost 2.61%. What is behind this major loss of Stockholder Confidence? Pundits are blaming the dropping Housing Market, and the dropping Durable Goods production when excluding Big-Ticket transportation sales. This Answer is too simple.
The Riddle is solved by the mixed Profits Reports being handed out. The Companies which are showing Profits are exactly Those who have begun to modify their Executive Compensation packages. Those who have not started to modify these Packages are not showing Profit ranges now at current Stock levels, and are intent on saturating the Market with new Stock Grants and Options. The real Problem with this Picture is that Those companies showing a relative sane Profits scene plan aggressive Acquisition growth programs; by virtue of Stock awards. Future Profits seem threatened by Corporate leadership’s greed and Power hunger. lgl
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