BBC NEWS
Single trader behind oil record
The man behind the record rise in oil prices to $100 a barrel was a lone trader, seeking bragging rights
and a minute of fame, market watchers say.
A single trader bid up the price by buying a modest lot and then sold it immediately at a loss, they
claim.
The New York Mercantile Exchange said that US crude oil futures traded just once in triple figures
on Wednesday.
Some analysts questioned the validity of the trade, though their concerns faded as oil set a record
on Thursday.
New York light sweet crude climbed to a new high of $100.05 a barrel on Thursday.
Vanity trade
On Wednesday, one floor trader bought 1,000 barrels, the smallest amount permitted, and sold it immediately
for $99.40 at a $600 loss, said Stephen Schork, a former floor trader on the New York Mercantile Exchange and the editor of
an oil market newsletter.
"They absolutely overpaid," he told Radio Four's Today Programme.
"He paid $600 for the right to tell his grandchildren that he was the first in the world to buy $100
oil."
Most trading in energy futures has shifted away from the trading floor and takes place on electronic
platforms.
The NYMEX, along with the Chicago Mercantile Exchange is one of the last bastions of "open outcry",
where traders use frantic hand signals to trade securities.
In London, open outcry trading still takes place on the London Metal Exchange, where aluminium, copper
and zinc are traded.
The supporters of electronic trading claim that it is faster, cheaper, more efficient for users, and
less prone to manipulation by market makers.
The dwindling liquidity on the NYMEX trading floor has led to considerable speculation that the exchange
will soon shut down the trading floor to cut costs.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7169543.stm
Published: 2008/01/03 17:30:21 GMT
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