Bank sold over $270 million of US oil futures ahead of OPEC+ meet, source says

A single bank sold a large volume of U.S. oil futures contracts in early afternoon trading on Wednesday, a person with direct knowledge of the matter said, pushing prices down more than 1% within minutes and causing traders to scramble to decipher the reason.

The sale, just hours ahead of an OPEC+ virtual meeting at which the group is expected to extend supply cuts through the end of the first quarter, left traders scrambling to make sense of the rationale for the transaction.

The bank sold 4,000 lots of U.S. West Texas Intermediate crude oil futures CLc1 in a single block at $69.21 a barrel around 1 p.m. EST (1800 GMT), the person said. The buyer then sold the contracts immediately afterwards, putting pressure on prices, they added.

A spokesperson for CME Group CME.O, owner and operator of the New York Mercantile Exchange on which WTI futures are traded, confirmed that an outright block of that size traded. They declined to disclose the identity of the parties involved.

WTI futures for January delivery fell from $69.42 a barrel at 12:59 p.m. to $68.76 a barrel by 1:00 p.m.

WTI futures settled at $68.54 per barrel, down $1.40, or 2%.

A lot of WTI futures equates to 1,000 barrels of oil, putting the value of the 4,000-lot trade north of $270 million.

The average volume for the front-month WTI contract on the New York Mercantile Exchange since Sept. 4 has been around 200 lots per minute, according to data from financial firm LSEG.

“Everyone’s trying to figure this out,” Mizuho analyst Robert Yawger said when asked about the sharp sell-off. “I have not seen any headlines that would explain it.”
Source: Reuters (Reporting by Shariq Khan and Scott DiSavino in New York; editing by Jonathan Oatis)