Goldman Sachs ($GS) is one of the largest players in the oil markets worldwide. Could their problems lead to a sell off in the price of oil itself?
Dan Dicker, who boasts 20 years of experience as a New York Merc floor trader, believes that there will be a great deal of scrutiny of dark pools in general as a result of the recent fraud charges. he believes that oil traders and speculators will run for the exits in the belief that Goldman’s shrinking presence in the oil market will mean lower prices.
Writing at RealMoney Silver, TheStreet.com‘s subscription service, Dicker says the following:
Goldman’s (GS) fraud charges are sure to affect oil prices too — and I think crude will be a terrific short for the medium term. Of all the things surely affecting oil prices, it has been my theory that the financial player’s perceptions of the market are the most important and telling.
He goes on to explain how the large integrated oil companies, formerly the big boys in the oil pits, are not as influential compared to Goldman and Morgan Stanley ($MS). Should the financial players be pushed away from their trading activities, there could a real sell-off…
And I’ve seen the pattern enough in the past before to know: If you can lever some of this speculative money out of the market, by hook or by crook, prices go down — and sometimes they go down a lot.
If you’re able to read the whole article, I highly recommend it…