Traders Place Large $950 Million Bet On Oil Price Falling Hours Ahead Of Ceasefire
LONDON, April 8 (Reuters) – Investors bet nearly $950 million on falling oil prices just hours before the United States and Iran declared a ceasefire; It’s the latest big bet on the direction of the world’s most traded commodity ahead of a major policy announcement from President Donald Trump.
On Tuesday, investors sold a total of 8,600 lots of Brent and US crude futures contracts as of 1945 GMT, according to LSEG data.
At around 22.30 GMT on Tuesday, Trump backed off his threat to destroy “an entire civilization” and issued a statement. two week ceasefire Crude futures LCOc1 and CLc1 with Iran fell nearly 15% below $100 per barrel at the start of Wednesday’s official trading session.
It is not uncommon to take large positions on rising or falling oil prices, as traders use them to hedge against trading large volumes of physical oil.
Michael M. Santiago via Getty Images
But such deals are very rarely made in large batches, as traders prefer to use blanket orders on many exchanges, requiring brokers to use algorithmic trading for hours to execute the order to avoid influencing prices with their bets. Large orders are also rarely processed after payment occurs at 18:30 GMT, Monday to Friday.
The bet follows similar moves on March 23, when investors sold $500 million oil futures Just 15 minutes before Trump announced that he would postpone attacks on Iran’s energy infrastructure, which stunned markets and subsequently led to a 15% drop in the price of crude oil.
In Tuesday’s trading, approximately 6,200 lots of Brent futures contracts changed hands at 1945 GMT; this was roughly 1% of the total volume traded in the day’s regular session. At the same time, approximately 2,400 lots of WTI futures contracts were traded, accounting for about 1% of that day’s normal volume.
CME Group declined to comment. ICE did not immediately respond to Reuters’ request for comment.
Trading volumes and volatility have exploded since the beginning of the war. On average, in the three years before the war, approximately 300,000 lots of Brent crude futures contracts would change hands per day.
This amount has doubled in the last four weeks, with daily volumes reaching record levels of over 1 million lots, equivalent to one billion barrels of oil.
(Reporting by Amanda Cooper, Alex Lawler and Ahmad Ghaddar in London; Editing by Elisa Martinuzzi, Dmitry Zhdannikov and Elaine Hardcastle)
