Perhaps Richard Arens just got bored of waiting for oil to pass the magic but meaningless three-figure mark. Or perhaps he wanted a natty print-out for the office loo, a lasting memento of his moment in market history.
Regardless of motivation, it was a single small deal by this independent trader that on Wednesday pushed oil prices briefly to the unprecedented $100 a barrel level, reports Javier Blas in the FT.
Struck on the floor of Nymex at a hefty premium, about 50 cents, to prevailing prices, that trader, named as Richard Arens who runs a brokerage called ABS, bought just 1,000 barrels of crude, the minimum allowed, from a colleague. The result was a divergence of the prices posted on Globex electronic screens at the exchange and through traders that work the floor – and widespread confusion, says the WSJ.
Before the $100-a-barrel trade, adds Blas, oil prices on Globex were at $99.53 a barrel. Immediately after the trade, prices went down to about $99.40, suggesting a trading loss of $600 for Mr Arens.
Stephen Schork, a former Nymex floor trader and editor of the oil-market Schork Report, commented: “A local trader just spent about $600 in a trading loss to buy the right to tell his grandchildren he was the one who did it. Probably he is framing right now the print reflecting the trade.” Local traders trade on their own money.
West Texas Intermediate crude oil closed in New York significantly higher at $99.64 a barrel, up $3.66 on the day. On Thursday morning in Europe it was up again slightly trading at $99.66 a barrel.
