Did Someone Intentionally Try To Crash The Crude Contract?

Tyler Durden's picture

We have noted the incessant slamdown in the precious metals markets, and highlighted that the only thing that can slow the flood of liquidity into each and every market is a rise in energy prices. The former represents 'trust' in the system; the latter represents 'real economics' as it squeezes the global economy forcing the central banks to pull back or tighten (see China's lack of rev repo recently). To wit, we just noted the plunge in WTI this morning; but Nanex, given their depth of data, noticed something considerably more concerning... "Because the circuit breaker tripped after the market had somewhat stabilized, we think another large sale appeared that would have decimated prices - which CME's circuit breaker logic picked up on, causing the halt." Did someone intentionally try to crash the WTI Crude contract? And if so, who? We don't know, but the usual suspect (singular) does emerge, considering that with gas prices hitting new February daily record every day, and every dollar in increase in WTI means even less (seasonally adjusted) GDP, and less consumer purchasing power, those evil speculators who are taking the Fed's free money to buy commodities (and very unpatriotically not the S&P or Russell 2000) must be promptly punished.

Via Nanex,

On February 20, 2013 at 11:01:36, the April 2013 crude oil futures contract was hit with over 2500 contracts within 2 seconds sending prices sharply lower. Oddly enough, 12 seconds later, all CME oil futures contracts halted for 10 seconds. Because the circuit breaker tripped after the market had somewhat stabilized, we think another large sale appeared that would have decimated prices - which CME's circuit breaker logic picked up on, causing the halt. This large ghost sale must have been canceled before the 10 second halt ended. Another explanation is a software bug in CME's circuit breaker code, which we doubt because they have had great success with their circuit breaker logic.


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Xibalba's picture

Why would THE PRESIDENTS WORKING GROUP ON MARKETS try to crash commods?  




oh right, to defend that funny money called USD's

THX 1178's picture

Silver, gold and oil slammed. It is a coordinated effort to keep the USD ponzi scheme running just a little longer. Desperation.

Mr Lennon Hendrix's picture

Per the comment above, for anyone who still listens to the talking heads on cnbc when they laugh off the "Plunge Protection Team"....

Executive Order 12631--Working Group on Financial Markets:


SamAdams's picture

This is obviously the work of the PCT, Plunge Creation Team.  Much like the PPT, they seem to have the ability to create zeroes and ones at will. 

strannick's picture

Now you know how us Silverbugs feel... Dont worry. The CFTC is on it. Bart Chilton has on his Inspector Clouseau hat, investigatory magnifying glass in hand, looking for manipulation elephants in garbage cans, fluffing his boofon hairdo for interviews with Lauren Lister.

Stackers's picture

Sorry, that was me. I was in the daytrader chat room and joked around everyone should sell WTI at exactly 11:01

DeadFred's picture

What you can take from this is that Goldman and JPM are both long WTI. Otherwise the breaker would have let the trades through the way they do with the PM trades.

Xibalba's picture

They laugh it off because they are paid to 'keep the dream alive' 

CPL's picture

Until the last refinery is closed and nobody gets to drive or turn on the lights.

Again, oil should be 340 bucks a barrel, no if's, and's or but's.  Can't hold an asset price down in a market where the other 99.9999% of all products have increased 500% over four years.

Cheap is good, only if it's reasonable to the situation and outcome.

Totentänzerlied's picture

$340 seems a wee bit cheap.

steve from virginia's picture



Priced as a human labor equivalent a gallon of gasoline should cost $1,500.


Imagine the kind of economy we would have if gas was too valuable to waste? What if gasoline was like ...


... gold?

Kitler's picture


Three weeks of human powered effort per gallon of gas. Try to get someone to push around your Hummer for three weeks for 4 bucks.

It's a bargain.

darteaus's picture

Or, it could be a cash-out, no?

THX 1178's picture

Slam the price and then buy as much as they can? If so, systemic failure will come MUCH faster.

darteaus's picture

I really don't know, but the Walmart, Catepillar & Foxconn data suggest widespread near term slowdown.

Maybe they can't hold the flood waters back any longer, or they've decided they can make money leaning in the other direction.

Againstthelie's picture

Hm, as a gold and silver futures trader i can only laugh. This is almost daily occurence in our "market".

Is now oil becoming a centerpiece of the inflation expectation management, too?

Divided States of America's picture

They just testing it on oil futures before it goes live on the ES futures....i think the experiment was very successful today.

VonManstein's picture

So for the to gain 0.30% we need down 3% 1.5% 2.2% 1% and Equites ~0.5% >> KING DOLLAR LOL


kill switch's picture

I think we are finally witnessing the fuck storm..This ride down is going to be epic,,bring in the drones..take the guns...man this is fun shit!!



The kill switch

tecno242's picture

could be...

any change to the status quo these days could cause ugly chain reactions

ZeroAvatar's picture

There, for a week or two, it seemed as though all the plates were spinning together, smoothly, and that they could stay that way.


Suddenly, now, though, the gyroscopic movement is beginning to wobble, the plates are starting to fall......

max2205's picture

High gas kills snap.  Cash is wack. Ben wants everything cept oil to scresm higher. 

Helping bonds reverse as well

Flakmeister's picture

How many of those contracts sold were naked?

Flakmeister's picture

Thanks, but it was a rhetorical question....

Flakmeister's picture

I wonder which of the ZH regulars that is?

Hulk's picture

I think its knukles, LOL !!!

It could also be "son of Burl Ives"

CPL's picture

That guy has a rock solid ab.  He must be juicing because he's got hair growing out his ears.

Cdad's picture

Nice "market."  

otto skorzeny's picture

"circuit breaker"-can't have anything drop too much-although a 10%+ spike up in NFLX is A-OK.

slaughterer's picture

Blythe decided to temporarily switch over to WTI for a giggle. 

localsavage's picture

Sorry guys I only filled the SUV half full today.  I guess they caught it.  I won't let it happen again.

otto skorzeny's picture

see alot of people at the station only putting in $20 at a time to get them a few more days til the economy takes off

Dr. Richard Head's picture

I do notice that thise around me at the gas pump tend to look in awe as I fill up my entire tank and then rip out three 5 gallon gas cans and fill them up too.  In the future I am going to start driving a crappy car, wear crappier clothes, so as not to mark myself a target for the $20 filler-uppers.

Cognitive Dissonance's picture

The drone drivers still know where you live.

Raymond Reason's picture

Exactly, Dr. Dick.  The funny thing i've noticed is the number of young chicks checking me out, in my dented '98 corolla. 

Papasmurf's picture

Chicks are beginning to know that debt-free is the new hot guy.

swissaustrian's picture

I guess there are no circuit brakers in precious metals...

Kirk2NCC1701's picture

LOL.  No, that would be against... 'tradition'.  ;-)

EscapeKey's picture

They'll be put in place once gold makes a large move... upwards.

ziggy59's picture

There is...2% rule only applies when pms climb...

q99x2's picture

Put a copper penny in the circuit breaker (if you can find one.)

Papasmurf's picture

Use a 90% silver quarter.  My dad always warned me that putting a penny in the fuse box could lead to corrosion and fire.

DavidC's picture

All I can see is complete and utter desperation in trying to keep the stock market up (more so after Greenspan's comments the other day). Dow back up to more or less where it was on today's figures - go figure...