Thursday tumble shows presence of ‘stupid money,’ says trader
By Virginia Harrison and William L. Watts, MarketWatch
LONDON (MarketWatch) — Crude futures dropped sharply to trade below $100 a barrel on Friday, a day after crude suffered its biggest loss in more than two years and sparked a widening of trading limits by the exchange operator.
Light, sweet crude for June delivery CLM11 -2.01% fell $3.25, or 3.2%, to $96.70 a barrel on the New York Mercantile Exchange during European trading hours.
The decline extended a drop that took oil as low as $99.35 a barrel during the North American session, registering its biggest one-day percentage decline since April 20, 2009.
Weak U.S. economic data and the selloff in other commodities weighed on the crude market.
Oil trader and energy-market expert Dan Dicker said crude’s fall was part of Thursday’s general commodities selloff, “starting with silver, and oil was the last to get it. It is great proof of just how much speculative money there was in the oil market.”
“You’d expect it to kick back. There was a lot of margin selling going on. It’s proof of just how much stupid money there is in the oil game,” Dicker said.
The sharp drop prompted exchange operator CME Group to expand its limits on how far oil can rise or fall during a session.
CME raised the limit to $20 from the previous $10 level set for oil futures. The dive in heating-oil futures HOM11 -1.39% to their limit of 25 cents prompted the move, the exchange said. See report on CME’s changes to oil-trading limits.
Heating oil for June delivery fell 8 cents, or 2.7%, to $2.81 a gallon. The contract fell 26 cents, or 8.1%, to $2.89 a gallon Thursday, its lowest settlement since Feb. 24, and the biggest one-day percentage drop since March 2009.
Metals were also under pressure, a day after silver saw its largest one-day percentage drop since Dec. 1, 2008, and gold saw its biggest one-day percentage decline since mid-March. Read more about metal markets.
