48% of Crude positions held by speculators. One trader holds 10% of OI

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080805/REG/402387333/1036

Hmm, not exactly being splashed across prime time and mass media is it?

What happened to position limits, I would have thought 10% of OI in a supercycle bull market would have exceeded position limits. Was someone asleep at the wheel or just turning a blind eye. Do I smell th stench of corruption (again).

 

Some people can not/ will not follow links...but its a good read...

Revised data show speculators controlled nearly half of NYMEX oil futures
CFTC data also reveals one trader controlled 10% of oil futures on exchange

August 5, 2008

(Reuters)—A quiet data revision that has boosted by nearly 25% the number of oil futures contracts U.S. regulators think are held by speculators. And that revelation is raising eyebrows in the energy trading community.

The revision means that speculators controlled 48% of the open interest in NYMEX crude oil futures and options as of July 15—compared with just over 38% 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 reclassified only one unidentified oil trader at the same time as the data revision.

“There may have been multiple ‘positions’ which were reclassified ... but they all appear to have been held by just one trader, and this was a very special trader, with an enormous concentration of positions in crude oil amounting to perhaps 460 million barrels, and not much interest in anything else,” noted John Kemp of RBS Sempra Commodities.

A CFTC spokeswoman declined to elaborate on the move or to identify the trader that had been reclassified as a speculator.

The reclassification comes amid the collapse of energy trader SemGroup LP, which filed for bankruptcy on July 22 after suffering $3.2 billion in losses on oil futures and derivatives.

SemGroup has blamed its collapse on unauthorized speculative oil trading by its co-founder and former chief executive, according to a court filing by a SemGroup lender.

The SemGroup collapse coincided with a sharp fall in oil futures from their peak over $147 a barrel in mid-July. However a person familiar with SemGroup’s trading position said Monday the trader’s position was not concentrated in any one month and was more focused on intermonth spread positions.

“This was no Amaranth or Motherrock,” said the person familiar with SemGroup’s futures trading book, referring to two energy hedge funds whose multibillion dollar failures roiled futures markets.

SemGroup began the process of transferring its NYMEX trading book to Barclays on July 11 after drawing down a $54 million line of credit to place a deposit with the British bank, according to bankruptcy court testimony.

SemGroup completed the transfer of its trading book to Barclays on July 16.

The transfer of SemGroup’s NYMEX trading position was instigated by the exchange itself, according to a source familiar with the NYMEX’s activities.

SemGroup’s financial difficulties were first disclosed by its publicly traded subsidiary SemGroup Energy Partners LP on July 17, three days after its parent hired The Blackstone Groupto advise it on restructuring and two days after a conference call with its lenders where it told them it had run out of cash.

The Securities and Exchange Commission and the U.S. Justice Department are investigating SemGroup Energy Partners’ disclosure practices.

 

I guess that whole supply and demand issue has been thrown out the window, no such thing as economics 101. Millions of americans have paid BILLIONS AND BILLIONS of extra dollars at the cost of speculators in the oil pits. Truly F$%Kin amazing.

 

Once again, you (S2007S) show that you have very little understanding of how the markets work. Please do us all a favor and keep your mouth shut until you are able to have a much better understanding of how commodity markets function.

At CFTC regulated exchanges like the NYMEX, you are exempt from position limits if you qualify as a bona fide hedger. Such an application must be approved by the Exchange president or his designee.

Depends on the company's hedge or swap exposure, financial conditions and stability of the company, market liquidity, trading history of the company, internal procedures and risk controls to oversee the position, etc.

 

Will the real Slim Shady please stand up!


“There may have been multiple ‘positions’ which were reclassified ... but they all appear to have been held by just one trader, and this was a very special trader, with an enormous concentration of positions in crude oil amounting to perhaps 460 million barrels, and not much interest in anything else,”

Ok, who was the wisenhiemer around here with all those oil contracts. You big dummy.

 

When are they going to say who the ONE speculator was???

 

Ok thanks, the fact that the positions are spreads may also count for something, but it seems he was not a bona fide hedger, and as for financial standing.................

 

I find it funny now that after the fact oil has come down they talk that nearly 100% of this run up in oil is based on speculation when just a month or 2 prior they were talking about peak oil and such high demand that the world consumes, 85 million barrels a day vs the 86-87 million demand they are looking for.

 

<i>“There may have been multiple ‘positions’ which were reclassified ... but they all appear to have been held by just one trader, and this was a very special trader, with an enormous concentration of positions in crude oil amounting to perhaps 460 million barrels, and not much interest in anything else,” noted John Kemp of RBS Sempra Commodities.</i>

460 million barrels / 85 million bpd

oh thats about enough to run the world for 5.5 days

That is one very 'special' trader.

 

I read here, so take it for what its worth, but someone mentioned that California alone consumes more oil than all of China.
Ha, you want demand, just wait until Tennessee gets industrialized.