CFTC/NYMEX Come Clean and Revise Data on Oil Speculators
There were numerous plot twists in the movie Syriana, but the writers were not clever enough to think of this one. Conspiracy theorists take a bow:
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. Financial Week
Of course, the CFTC is not identifying the trader, which is true to the industy's code of Omerta.
Stranger still is Morgan Stanley’s role in recent events. Their $150 crude oil call in early June seemed awfully suspicious to me; the minute Bart Stupak showed his cards Morgan’s oil service analyst pounced, and crude traded within spitting distance of his $150 target, where somebody did some selling after the squeeze.
Even more suspicious is the recent ramp in Morgan Stanley’s (MS-NYSE) stock. There are many crosscurrents in the financial stock’s, but will their next earning’s release show that they made billions on their various prop desks shorting crude and natural gas in July?
One thing is damn sure. Morgan’s recent mandate to help the GSE’s figure out their capital structures has nothing to do with it. They took on the work gratis, and will only be paid 95k to remiburse them for expenses.
No manipulation in energy markets? C’mon all of this stinks to high heaven. Market forces win in the end, however.
But the world’s largest poker game rolls on.
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United States Oil (USO-AMEX) 3-month chart
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Revised data show speculators controlled nearly half of NYMEX oil futures
Financial Week
Interim Report on Crude Oil
Interagency Task Force on Commodity Markets-July 2008
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