From what I understand a lot of these trend following commodity funds wait until the last day before switching to the forward month. I just hope it was not mine that blew up. Thanks for the post
Posted by on 09/22/2008 at 03:54 PM
Bolling on Today’s Ramp in Crude Oil
Monday, September 22, 2008 - 3:37 pm
I interrupt your mourning for a possible explanation on today's bizarre moves in crude oil, which basically traded from $100 to $130 before settling in around $115.
Eric Bolling on Fox Business:
“I just got off the phone. I just called everyone I know. Expirations are always volatile. This is an expiration. October contract of crude oil comes off the board today at 2:30 PM, which means you better be flat the position. Apparently, there are some big hedge funds – across the board, not just one or two – substantial amount of hedge fund positions squaring in anticipation of this expiration. Apparently the hedge funds were short. They were looking for oil prices to go down. To cover a short position, you have to buy those back. They’re scrambling upon each other trying to buy those back. I have a hunch, I said it earlier, I have a hunch we’ll hear big names, big names losing a lot of money in oil prices.”
“I think there will be more than one hedge fund [to go down], to be honest. I think you have serious implications down the road. We don’t find out if its private hedge fund, it could take weeks before we know who and when and how much. If its public or a big name, you may hear it sooner.” FBN
“With oil up say $20 a barrel, that should 50 cents at the pump. Gasoline should be up 50. It’s only up about 10 cents. We’re getting a real break at the pump, which tells me this isn’t about the gasoline or the dollar. It started with the dollar. This is some big players being on the hook the wrong way. I hate to throw out speculation but the biggest oil traders in the world, you may hear something.”
There was also some market chatter that might have contributed to the ramp, although I do not know if it is accurate:
....the rise in oil late day was not just expiration and dollar related but on word PEMEX’s Cantarell field fell 28% in August (Cantarell field is one of the largest oil fields in the world)
Of course, every commodity in the CRB was up today. Stuff is back, at least for a day or two, and peak oil theorists might be dancing a jig somewhere if the news from Mexico is accurate..
Equity investors, not so much.
The United States Oil ETF (USO-AMEX) never ramped like the futures; something strange went down however. But the fun and games in the energy pits continue.
artwork by Woodrow
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position
Comments:
Overheard GS oil pit got all bloody yesterday covering their short calls.
Posted by on 09/23/2008 at 02:12 PM
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