The Oil Desk

Crude oil is a relatively small market ($ wise). Current fundamentals don't (theoretically) support this resilience. Maybe we're going parabolic then implode. Dollar weakness says a lot.

 

Crude oil is NOT a relatively small market no matter how you look at it.

 

Agreed.
And as the OP has obviously missed, the Crude rallies off the weaker dollar. Has been, and will continue to do so.

 

i thought i touched on the dollar issue.

look at open interest and look at the size of some of these hfs. the crude market is a relative dwarf.

 

Anyone still holding front month long, look out. If Bernake wants to mess with you, he may take the opportunity to hurt you. I know its conspiracy but careful in here. He can take a weak report this week and pile on with Chinese help.

 

You're failing to count the other petrol derivatives like the large swap marktet.

Crude market is deep and wide.

 

Just ask Andrew Hall at Citigroup/Phibro

 

Exactly.

Andrew Hall's no-fail pickup line: "Hey, you ever f*cked someone who owns a castle?"

 

its the same old "poop" everyday

no matter what color it is
where it ends up is in the pockets
of the dark side

www.youtube.com/watch?v=wsLqKAvKiQM

 

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.

Welcome to August, looks like the same ol