GO
Loading...

Oil Market Manipulated?

Investors were scratching their heads Thursday after learning that authorities may have uncovered wrong-doing in the oil market. Specifically the Commodity Futures Trading Commission charged global trading fund Optiver Holding with manipulating the NYMEX oil market in March 2007.

The complaint charged that three employees of the Netherlands-based fund made about $1 million through manipulation of crude oil, gasoline and heating oil futures on the Nymex. On a relative basis it’s a small case.

According to the complaint, the employees carried out a manipulative scheme known as "banging" or "marking"' the close. "Banging the close" refers to the practice of acquiring a substantial position leading up to the closing period, followed by offsetting the position before the end of trading for the purpose of attempting to manipulate prices.

The agency said the employees in three instances forced futures prices lower and in two instances caused prices to rise.

"Although this alleged energy trading scheme lasted only several days in March 2007, even short-term distortions of prices will not be tolerated by the commission," said CFTC Acting Chairman Walt Lukken.

As Wall Street grapples to understand happened, everyone has Enron in the back of their heads. Is there larger manipulation going on?

“There’s no evidence that we’ve seen”, says Nymex CEO Jim Newsome on Fast Money. “Nymex is a very transparent marketplace. We’ll continue to monitor it but right now there’s no signs of manipulation.”

In fact, if you look at it from another angle you may find it comforting that these criminals were apprehended. "It's certainly an example that the Nymex and the CFTC are doing their jobs," adds Newsome, "and the cops at the CFTC remain on the beat."


To see our entire interview with Nymex CEO Jim Newsome please watch the video.















______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send your e-mail to fastmoney@cnbc.com.


Trader disclosure: On July 24, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WMT), (MSFT); Finerman Owns (GS), (WM); Finerman's Firm Owns (SUN), (TSO), (VLO), (MSFT); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (BBT); Seymour Owns (AAPL), (BAC), (F), (MER), (MSFT), (TSO), (BX); Seygem Asset Management Is Short (MTL); Seygem Asset Management Owns Gazprom

Terranova Owns (YHOO), (INTC), (IYT), (BNI), (GOOG), (CME), (RIMM), (VLO), (SA), (XLF), (FCX), (SU); Terranova Is Long Crude Oil September $154 Calls, Terranova Is Short Crude Oil September $130 Calls, Terranova Is Short Crude Oil September $130 Puts, Terranova Is Long Gold Futures (December)

Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (DBV), (RWX), (LNET), (EXR), (SKT), (DLR), (IGE), (ARE), (DBC), (ABD), (OFC), (CLB), (BLV), (CNTY), (FL), (HPC), (PSPT), (ESS), (OIIM), (BIG),(ENG),(PFD),(DRH)

Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Charles Schwab Is A Sponsor Of "Fast Money"

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report