Who's Controlling the Oil Futures?

This is huge - don't ya think?

The revision means that speculators controlled 48 percent of the open interest in NYMEX crude oil futures and options as of July 15, compared with just over 38 percent under the previous classification.

"That's huge when you look at the numbers," said Phil Flynn of Alaron Trading in Chicago.

"It changes the whole way you look at the recent moves in this market."

The U.S. Commodities Futures Trading Commission announced on July 18 that it was reclassifying some trading positions that it had reported as commercial hedging positions as noncommercial speculative positions.

The data revision converted approximately 327,000 long and 330,000 short NYMEX crude oil futures and options positions into mostly spreading positions held by speculators.

The big shift is all the more surprising, oil traders and analysts said, since the CFTC apparently reclassified only one unidentified oil trader at the same time as the data revision.

www.reuters.com...

48%?????? Possibly one person/entity. Think about this. My goodness, is anyone messing in this market?

Hahahahahaha - the article title says it raises eyebrows. It should be raising more than that. this might be interesting to follow.

reply to post by Relentless


these same speculators who have been sucking the blood off the consumers plight, are now in a deep crap hole, a hole they dug for themselves, simply because the people have decided to use less gas and use alternative modes of transport.

Saw this recently on another board. I think that's pretty damn interesting info there. That is a HUGE amount of contracts held by a single person. I'm not very comfortable talking about comodities trading. I know there is a limit to amount of contracts held by a single entity, with some exceptions. Anyone know the limit?

The data revision converted approximately 327,000 long and 330,000 short NYMEX crude oil futures and options positions into mostly spreading positions held by speculators.

the CFTC apparently reclassified only one unidentified oil trader at the same time as the data revision.

That to me is the most important part of the article. Anyone disagree it's saying a single player in oil with some 657,000 contracts of crude. I know it's hedged somewhat with both long and short holdings, but given the massive moves both ways in oil recently, I'd damn sure like to know who's playing that big. I'm not that great with commodities, does anyone know margin requirements for a contract of crude? What kind of margin would this player need to hold that? Any Ideas of who would be big enough to pull that. A sovereign wealth fund, Goldman, Soros, Buffet, OPEC, a Saudi, any ideas?

From the OP's article page 2:

A CFTC spokeswoman declined to elaborate on the move or to identify the reclassified trader.

She also said the agency would not confirm whether a single trader or multiple traders had been reclassified.

When the SemGroup BK was made public...it was widely suspected in the metals community that SG was the reclassified spec, caught posing as a hedger.

I bookmarked Ted Butler's analysis back on July 28....

Coincidence or Confirmation?

Big news recently is the world record loss in crude oil trading, taken by SemGroup, of Tulsa, Oklahoma, a large but mostly unknown oil pipeline, storage and trading company founded in 2000. To my knowledge, the reported $3.2 billion loss is the second largest commodity debacle ever, only behind the $6 billion loss recorded by Amaranth Advisers two years ago in natural gas.

....So, how do you lose $3.2 billion dollars in crude oil trading and how did that affect the price? The answer is with an obscene number of contracts on the wrong side of a rising market on the short side. That’s smack-dab where SemGroup was positioned, with more (and perhaps much more) than 100,000 short futures and options contracts....

....In this case, it’s easy to see, based upon the timeline, how SemGroup’s trading debacle influenced oil prices, first up, then down. As the end came near for SemGroup’s large, increasing short position, that position was forcibly bought back (probably by SemGroup’s lead broker, said to be Barclays). This accounted, by my calculations, for the last $15 to $20 increase in the price of oil, up to the $147 price high. When the forced buyback of the short position was concluded, a buying void was suddenly created and prices then fell $20+ to date. So, not only did SemGroup manage to lose over $3 billion and go bankrupt in the process, it also dramatically influenced the price of oil and fuel for the rest of the world. Full Text

Aside from a 3,000 contract limit, 3-days out from expiry, no other Nymex limit that I'm aware of. On the other hand, regulators do have the option (responsibility?) to scrutinize any entity holding over 20,000 contracts in a given month. Guess they were cat-napping. Margin requirements on some contracts currently run as high as $9,250.

Still not sure how many specs-in-drag were reclassified...or the exact size of SG's position.