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To: D_I_R_T who wrote (32692)	1/11/2007 3:07:57 PM
From: Bucky Katt	Read Replies (1) \| Respond to of 48461

Goldman has a hand in the current drop in crude due to the changes they made in their commodity index. Add in punk demand due to warmer than expected weather, increased carry costs, etc and some air has come out of the energies. www2.goldmansachs.com Backround> It might be a better idea to thank Goldman Sachs, not the weather, for the recent plunge in oil prices. While recent balmy temperatures have certainly played a role in last week's dip in oil prices, a lesser known, but equally powerful, move by Goldman at the start of the year might bear some responsibility as well. Goldman cut the energy portion by as much as 50 percent in some of the sub-indexes that comprise the widely followed Goldman Sachs Commodity Index, tamping down moves to buy them by large investment funds who mimic Goldman's index. The changes took effect this month and apply for all of 2007, a Goldman spokesman said. Crude oil futures plunged 9 percent Wednesday and Thursday to $55 a barrel, before settling Friday at $56.31. The two-day decline was the sharpest since December 2004. The GSCI is influential because large institutional investors like pension funds and endowments invest according to its allocation model. "If Goldman's model tells them to cut their energy exposure by half, they do it," says Warren Mosler, president and chief investment strategist of Valence Corp., a multi-billion dollar hedge fund. Mosler said cutting crude allocations by more than half will help to reduce inventories in the medium term and once those surplus inventories are liquidated prices will begin to rise again. Last August, Goldman reconfigured its index by removing a Nymex unleaded gasoline contract that was being phased out. The move triggered a huge selloff in gasoline almost immediately. Prices eventually stabilized when a new contract was added, but the change produced huge losses at many hedge funds.