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Post by jeffolie on May 5, 2011 12:51:15 GMT -6
Oil $98.XX.... down nearly 15% over the recent period Oil remains fundamental to commerce...so the smackdown to below $100 most likely forced 'stop loss' orders to execute as 'sell at the market orders" today. Oil was recently as high as nearly $115 and today traded with a $99.XX handle...down nearly 15% over the recent period ===================================================== Previous close...$ 109.24 Current quote...$98.49 Change -$10.75 -9.84% Day low ... $98.25 Day high ... $109.38 www.marketwatch.com/investing/fu ... electronic
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Post by jeffolie on May 5, 2011 13:21:35 GMT -6
Oil down nearly 9% on demand fears, metals selloff Natural gas drops 7% after inventories SAN FRANCISCO (MarketWatch) — Crude-oil futures fell nearly 9% on Thursday, trading under $100 a barrel as traders feared diminished demand after a report showed a poor job market and a selloff in precious metals brought down commodities. Stocks drop on weak data, earningsStocks fall, pressured by disappointing economic data, weaker commodity prices and lackluster earnings reports. Light, sweet crude for June delivery /quotes/comstock/21n!f:cl\m11 CLM11 -9.35% dropped $9.62, or 8.6%, to $99.82 a barrel on the New York Mercantile Exchange. The losses came on top of a decline of $1.81, or 1.6%, in floor trading Wednesday. Natural-gas futures also added to losses after a weekly inventories report showed a higher-than-expected increase in supplies. Other commodities traded lower, with silver futures down 8% at settlement, adding to steep losses since the beginning of the week. “It all started with the precious metals earlier,” said James Cordier, a portfolio manager at Optionsellers.com in Florida. “Oil is down because everyone is heading for the doors” to unwind their short dollar, long commodities position, he added. The weak jobs report added fuel to the fire with investors again worrying about a double-dip recession, Cordier said. “Here we are supposedly at the height of the recovery and not only we can’t create jobs, we are losing jobs.” The Labor Department reported Thursday applications for unemployment benefits jumped to 474,000 in the week ended April 30, their highest level since August. Economists had expected claims to decline to 412,000. Read more about the jobless-benefits surge. U.S. businesses’ productivity rose at a slower rate in the first quarter, while hourly wages adjusted for inflation saw the biggest drop in three years, according to a separate Labor Department report earlier Thursday. Read more about U.S. productivity. On Wednesday, investors grappled with a slowing services sector in the U.S. and weak purchasing managers survey in the U.K., in addition to the higher levels of U.S crude inventories. “Even excluding the impact of the Japanese earthquake from the data, manufacturing growth rates have fallen substantially from the very strong levels seen earlier in the year,” analysts at J.P. Morgan said in a report Thursday. “Very strong output growth over the past six months has resulted in a build-up in business inventories, as final goods expenditures have not kept pace. Rectifying this imbalance necessitates a slower, but still increasing pace of activity to rebalance the inventory picture.” A rise for the dollar contributed to pressures on price. The dollar index /quotes/comstock/11j!i:dxy0 DXY +1.53% , which compares the U.S. unit to a basket of six global currencies, rose to 73.851 from 73.095 in late North American trading. June natural-gas futures /quotes/comstock/21n!f:ng\m11 NGM11 -6.97% slipped 31 cents, or 7%, to $4.25 per million British thermal units. The Energy Information Administration reported an increase of 72 billion cubic feet to storage facilities of the product in the week ended April 29. Analysts polled by Platts had expected an increase in supplies between 64 and 68 billion cubic feet. www.marketwatch.com/story/crude- ... =countdown
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Post by nomad943 on May 5, 2011 14:17:32 GMT -6
Strange days indeed. To someone who has very little exposure to anything at the moment, this show is getting VERY interesting (every commodity, currency, bonds) but I'd be lying if I had a clue what was up .... and something sure is happening or about to.
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Post by jeffolie on May 5, 2011 14:19:36 GMT -6
Today the Dollar Index jumped....because a large portion of the Dollar Index is made of the Euro and the Europeans sort of announced in the style and choice of words in today's announcement that they would NOT RAISE RATES next month.
The rising Dollar index today from a 72.XX handle to a 74.XX was important to all commodities.
Margin increases focused mostly in silver started the REMOVAL OF SPECULATORS and some momentum traders.
Combining margin increases, trading losses, Euro rates 'now not scheduled to increase' resulted in unwinding spreads and FEAR. Traders thrive on big movements and trading ranges but not humans. HFT algorithms and market makers profit on wide spreads and accelerate the moves.
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I look forward to seeing my gasoline bill go down...slowly because gas companies push the prices up faster than they lower them.
10 year Treasuries rates fell to low levels today.
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Post by jeffolie on May 5, 2011 16:56:20 GMT -6
"....Booming commodities markets suddenly found themselves swept into sell-off mode in part spurred by a firming of the dollar, which makes dollar-priced oil and metals less attractive to investors.
The greenback gained ground against other major currencies -- particularly the euro, adding more than two cents, after comments by European Central Bank president Jean-Claude Trichet were more dovish than expected.
Oil prices also took a hit after a US jobs report signaled the labor market recovery was struggling, ahead of Friday's key April employment numbers. Oil headed south "as doubts about the US economy and its ability to sustain demand growth trump geopolitical tensions," said John Kilduff at Again Capital. New claims for US unemployment insurance benefits leaped to a whopping 474,000 in the week ending April 30, a 10 percent increase from the prior week and an eight-month high, the Labor Department reported. The rise surprised most analysts who had forecast a decline to 400,000. CMC Markets analyst Michael Hewson added that oil was also under heavy selling pressure from fears of slowing economic growth around the world. "Poor economic data out of the US and rising interest rate policies in China and India have prompted fears of growth slowdowns across the global economy, and therefore drops in demand, sending oil lower," he added. www.marketwatch.com/investing/index/DXY
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Post by jeffolie on May 6, 2011 12:33:32 GMT -6
$96.XX handle
During regular trading on Friday, oil declined into a $96.XX handle
Why?
One motivation most likely is the quick rise of the Dollar Index which as I post this is approaching a 75.XX handle.
Other reasons surely contributed to this and other commodities now declining.
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Post by jeffolie on May 6, 2011 17:07:13 GMT -6
This confirms my posts... the rising Dollar Index resulted in oil's decline...accelerated by"....High-frequency and algorithmic traders, comprising half the oil market, ' ".... High-frequency and algorithmic traders, comprising half the oil market, seem to have weathered Thursday's mayhem without breaking a sweat, unlike many of the new breed who took a beating in the stock market "flash crash" exactly a year ago. ...unlike Wall Street's "flash crash" last May, automated trading was not behind oil's plunge. Instead, he cited traders who had gone long-commodities and short the dollar, but were caught out when the U.S. currency bounced up. ..."
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Oil crash pits floor veterans versus computer algorithms
NEW YORK (Reuters) – A day after oil prices plunged an unprecedented $12 a barrel, a New York trader sat on the steps of the dormant oil futures pit, playing a word game on his tablet computer.
Back to business as usual for floor traders, a vanishing breed in a market now dominated by machines and algorithms, a fact that some of them say worsened one of the most shocking -- and baffling -- trading sessions ever.
On the waterfront of Manhattan's southern tip, veterans of the New York Mercantile Exchange's (NYMEX) pits recounted how the crash reminded them of the heyday of the trading floor.
"Yesterday was organized chaos down on the floor, it was right back to the old days," said Chris Kenny, crude oil options trader at Lloyd Group. "The size of the move was almost unprecedented and you could see it all there. Greed and fear, that's what this job is all about."
Action in the options pit was still lively, they said, reminding them of the jostling and jousting of days gone by.
Miles away from the emotional rollercoaster that marked Thursday's puzzling rout, the new breed of computer traders counted their profits in anonymous offices across the country.
High-frequency and algorithmic traders, comprising half the oil market, seem to have weathered Thursday's mayhem without breaking a sweat, unlike many of the new breed who took a beating in the stock market "flash crash" exactly a year ago.
"We continued to trade normally and be involved in the market the whole time, no differently than the day before. We didn't change our risk parameters or our model parameters," an oil futures trader at an proprietary algorithmic trading firm told Reuters.
Unlike with the stock market's "flash crash," few old-school traders blamed the algos for the fall, although some did blame them for the end of a way of life that aided both transparency and liquidity in an often opaque market.
"When you get massive electronic long-liquidation like that the price just moves rapidly. It wouldn't have been the same on the floor," said Bob Penny, an individual trader of crude oil and sugar who has been in the business for 31 years. "You didn't get price vacuums there. Funds don't try and finesse it -- when they decide to sell they just hit it."
While conventional wisdom would have suggested buying on the dips in such a seemingly illogical and abrupt decline, computer programs said otherwise as the fall continued.
"If you'd followed conventional wisdom... you would have got killed," said Jeffrey Grossman, President of BRG Brokerage.
Analysts at investment bank Credit Suisse said automated trading probably did play a role in the fall.
"We believe the magnitude of the correction appears in large part to have been exacerbated by algorithmic traders unwinding positioning."
NOSTALGIA
Many oil trading veterans returning to the NYMEX building on Friday swapped war stories of the previous day. Many still work out of booths and offices at the NYMEX, where open-outcry trading has withered due to the rise of electronic trading over the past decade.
The open pit still exists, but only a few thousand lots ever trade there, a fraction of the million-plus that trade almost round-the-clock.
Veteran traders at NYMEX, a unit of CME Group Inc (CME.O), recalled price swings linked to some of the biggest moments in recent U.S. history, including the 9/11 attack and Hurricane Katrina. The difference this time? Even a day later, most are unable to pinpoint exactly what set off the frenzy.
The bout of panic selling jump-started trading in the oil options pit, which has resisted the migration of volumes to electronic screens. Traders and brokers still stand shoulder to shoulder, communicating complex deals through a series of shouts and hand gestures incomprehensible to outsiders.
Brokers described near chaos in the pit as traders loaded up on $95 and $100 a barrel option contracts to protect against further price falls.
"People were getting their faces ripped off yesterday, everyone was yelling and screaming all day," one crude oil options broker said, who asked not to be named.
NEW GUARD
The way prices move has changed with trading practices. Lightening-fast, algorithmic traders, known as "black box" players, have multiplied in recent years. Many used to trade open-outcry, yet they are viewed as the antithesis of the old-fashioned pit trader.
Manoj Narang, CEO and chief investment strategist of Tradeworx, a hedge fund that also runs a high-frequency unit, called Thursday a "great day" for his fund, which trades commodity-linked Exchange Traded Funds (ETFs) and stocks.
Narang said that unlike Wall Street's "flash crash" last May, automated trading was not behind oil's plunge. Instead, he cited traders who had gone long-commodities and short the dollar, but were caught out when the U.S. currency bounced up.
"It was a very crowded trade," Narang added.
Even as prices plummeted, oil brokers also stood to gain from the huge jump in trading volumes.
On the sun-drenched plaza outside the exchange overlooking the Hudson River, long-term broker Dominick Caglioti was in good spirits.
"It was great for business because there was a lot of action," he said, extinguishing a cigarette before heading back into the exchange.
"It was still quieter than it used to be, but I guess screens don't yell."
news.yahoo.com/s/nm/20110506/bs_ ... ders_crash
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