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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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Wed, 02/20/2013 - 15:32 | Link to Comment steve from virginia
steve from virginia's picture

 

 

 

The world is getting poorer. High crude prices will do that to a world.

 

By the looks of things, $118 Brent is the new $147 WTI. That makes sense, the world is getting poorer. There is less credit. Instead of blowing up when crude prices reach the peak, the world sags into a miasma when crude prices reach the new, much lower peak.

 

At some near point the peak will be lower than the amounts needed by oil drillers to stay in business. That one is gonna be a real killer. (Next year? THIS year?)

 

Notice the ugly noises out of Japan and the euro-area. Note  the ongoing regional gasoline shortage in the US, the rolling shortage that will be somewhere in the US during different time periods this year.

 

http://www.washingtonpost.com/business/economy/gas-prices-are-on-a-myste...

 

It's gonna get wicked, children you won't like it.

 

 

Wed, 02/20/2013 - 17:04 | Link to Comment The Heart
The Heart's picture

Thanks for that Steve.

"The world is getting poorer. High crude prices will do that to a world."

Once a long time ago, a question came up to Granny. She was asked, "what was it like during the depression...and how did people survive?"

Her slow response came sure and steadily. She said, " Those people who owned their own land and houses had relatives come to stay with them and they made it in large families that were hard to keep fed." She went on to say, "no one had any money to spend. There just wasn't any."

Pondering that for many years, seeing the history of when a dime was a meal, it became so obvious to even the uninformed thinker, the oil companies would be used like a giant vacuum cleaner to suuuuck the monies from people little by little in a slow bleed to the point of near death in the coming planed crash. People would reach that fight-or-flight instinctive point of chaotic snappage. Throw in tons of SSRI drugs and all you have to do is leave the vacuum on, and slowly exit the room with all you can carry.

http://www.ssristories.com/index.php

Long has it been said to every gas station owner that had the fate to cross trails, "these oil companies will be used to kill off America, and the sheeple will do nothing about it." Ya know what? So far so good. The frogs are boiling now. How much longer can the scam go on? How about building twenty more gas refineries using the plenty that is available, putting people to work doing that all over the country, and ending the glopopoly thank you so we do not have to see such well orchestrated and planed chaos ruin what America still is, before an outside attack or something stupid like that happens.

Crazy thing: The babylonians own three quarters of the world, while keeping the people using up the other quarter and telling them there are shortages or not enough to develop for the prosperity of all. What if, all the higher benevolent technologies were released, and all those lands were Eco-sustainably in an Indian tribal-way developed and prospered from by all aboard?

Yeah yeah, everybody knows, coming to a theater near you soon...

 

Wed, 02/20/2013 - 17:35 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

A real pair of EOTW blokes ...

Wed, 02/20/2013 - 18:52 | Link to Comment Bandit und Buster
Bandit und Buster's picture

"The babylonians own three quarters of the world" 

The Ashkanazi jews own three quarters of the world"   Fixed it for you.

www.synagoguerising.com 

Wed, 02/20/2013 - 15:41 | Link to Comment Just Ice
Just Ice's picture

sheesh, the manipulation has been inflation of commodity prices by excess Benny Bux liquidity available for speculation ... as a commodity bear, downdrafts in price do not seem untoward but rather to be expected whenever the bubbleonians panic at thoughts withdrawal of their easy money may loom on the horizon

Wed, 02/20/2013 - 16:42 | Link to Comment lasvegaspersona
lasvegaspersona's picture

"Obama Recession"

These are the words he fears the most. This is why he MUST keep government spending UP!!! If that component of the GDP falls then he will surely get a negative Q1 2013 growth and with that the dreaded label of his own personal and well earned "Obama Recession". He will fight everything and everyone to keep this from happening. I think he will loose that fight.

Wed, 02/20/2013 - 17:38 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

TRUE dat ... avoiding and fighting that monikier which history WILL at some point have no choice BUT to bestow ...

 

 

Wed, 02/20/2013 - 16:55 | Link to Comment Herkimer Jerkimer
Herkimer Jerkimer's picture

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In way, way, WAY over my head, but…

"we think another large sale appeared that would have decimated prices - which CME's circuit breaker logic picked up on, causing the halt."

If the CME's 'circuit breaker logic' picked it up, does that not mean there is a lag in the making of the market or something that somebody might conceivable put sniffer software into, to see the future before it actually happened and have an extra millisecond of time to get in before everyone else does?

Just thinking out loud.

 

Not that anyone would ever do that, if they could, eh?

 

•J•
V-V

Wed, 02/20/2013 - 18:41 | Link to Comment Les Grossman
Les Grossman's picture

This is how crude trades.  This would have been weird if it happened when the floor was closed.

From 10:47 to 10:51 am volume evenly spiked  for each minute as  price gently drifted lower continuing to break intraday lows ALREADY OBSERVED 40 MINUTES EARLIER,  at 10:10 am.  Price then made a temporary regression up from 10:52 to 10:55 as volume faded to half as much as the preceding few minutes. (as observed in the 1 & 5 minute charts)

By 10:59 am. to 11:00 am the low from the PREVIOUS day was now being challenged to traders observing a larger chart time frame (i.e. 20 minutes to 120 minutes). When the price slipped over 10 cents—to 95.79— by 11:01 am yesterday’s lows were broken.  Mind you the slip in 10 cents took a good 2 minutes of moving down before being broken.  Within those 2 minutes, it also traded a few cents back above the broken support line--giving the average dude with an online account time to enter or exit the trade. 

This wasn’t hidden HFT Algos, this was the result of technicians that swing trade….this is the market, never forget the Flash Crash or ‘87.

 It also looks like there is negative pressure being put on by position traders, since crude evenly pivoted down since its contract expiration last week (as observed in weekly chart).

PS  Looks like we “can” see 92.5 before the April contract expiration.

PPS   Real price information is always, at least, 15 seconds late

Wed, 02/20/2013 - 19:59 | Link to Comment HX
HX's picture

Large commodity fund is liquidating - word on the street its Vermillion's - Viridian Fund. Also explains the sharp moves in metals.

Go ahead and put this rumor to bed.....just a technical.

Wed, 02/20/2013 - 23:53 | Link to Comment WageSlave
WageSlave's picture

Most likely explanation : Unhandled exception at 0x00411690 in exe: 0xC0000005: Access violation reading location 0x00000008

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