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joewp
Light Sweet Crude
Joined: Apr 05, 2005
Posts: 1628
Location: Springsteen Country (NJ)
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 Posted: Wed May 07, 2008 3:23 pm Post subject: Daily trading limit on Sweet, Light Crude (CL) |
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It occurred to me that I haven't checked on the NYMEX crude oil daily trading limits in a while. I did remember there used to be a $10 daily up or down limit that would stop trading for the day. In light of some of the soft commodities going limit up recently, I thought I should check on crude oil....
Guess what? There is no limit:
Light Sweet Crude Oil Contract Specs | Quote: |
Maximum Daily Price Fluctuation
$10.00 per barrel ($10,000 per contract) for all months. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $10.00 per barrel in either direction. If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session. |
So basically if the Persian Gulf is nuked, oil could go up by $60/barrel an hour and keep going up all day and all night.
Gasoline too:
Reformulated Gasoline Blendstock for Oxygen Blending Contract Specs | Quote: | Maximum Daily Price Fluctuation
$0.25 per gallon ($10,500 per contract) for all months. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $0.25 per gallon in either direction. If another halt were triggered, the market would continue to be expanded by $0.25 per gallon in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session. |
And gas would follow at $1.50/gallon an hour.
Do you think they're expecting something?
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Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb |
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joeltrout
Light Sweet Crude
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Joined: Sep 19, 2007
Posts: 1317
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| Posted: Wed May 07, 2008 3:26 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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I think they are being realistic. Oil prices are a market and people should let the market work.
And yes speculation is part of markets.
joeltrout |
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dorlomin
Light Sweet Crude
Joined: Aug 05, 2007
Posts: 1062
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| Posted: Wed May 07, 2008 3:47 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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| joeltrout wrote: | And yes speculation is part of markets.
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Farmers speculate when they decide which crops to plant for the year. People effectivaly speculate when they buy shares. |
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emersonbiggins
Moderator
Joined: Jul 10, 2005
Posts: 5067
Location: Dallas
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| Posted: Wed May 07, 2008 4:08 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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| joeltrout wrote: | I think they are being realistic. Oil prices are a market and people should let the market work.
And yes speculation is part of markets.
joeltrout |
Too bad the stock market isn't allowed the same latitude.
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"It's called the American Dream because you'd have to be asleep to believe it."
George Carlin |
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joeltrout
Light Sweet Crude
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Joined: Sep 19, 2007
Posts: 1317
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| Posted: Wed May 07, 2008 4:14 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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| emersonbiggins wrote: |
Too bad the stock market isn't allowed the same latitude. |
I heavily disagree with NYSE halting trading on news that can seriously hurt/help a stock. I see the reasoning behind it but I still think markets should play out as investors make their decisions.
joeltrout |
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heroineworshipper
Intermediate Crude
Joined: Jul 14, 2006
Posts: 629
Location: Calif*
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| Posted: Wed May 07, 2008 4:16 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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The trading limit is probably 1 quadrillion dollars, or however many dollars got printed yesterday.
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People first, then things, then dollars.
There will be enslavement, cannibalism, & zombie invasions. |
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Kristen
Heavy Crude
Joined: Jul 17, 2006
Posts: 255
Location: Minneapolis, Minnesota
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| Posted: Wed May 07, 2008 5:53 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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| That's very interesting to know. Still, I think the whole commodities is rather ambiguous. |
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peak
Tar Sands
Joined: Aug 21, 2005
Posts: 80
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| Posted: Wed May 07, 2008 8:17 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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| Trading restrictions are imposed to prevent a market panic. If the stock market goes up or down to much to fast then trading curbs are imposed. Trading is halted for X amount of time then resumed. This was done to prevent another black monday. |
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Concerned
Light Sweet Crude
Joined: Sep 23, 2004
Posts: 1536
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| Posted: Wed May 07, 2008 8:20 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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| peak wrote: | | Trading restrictions are imposed to prevent a market panic. If the stock market goes up or down to much to fast then trading curbs are imposed. Trading is halted for X amount of time then resumed. This was done to prevent another black monday. |
Markets should not be subverted. Markets don't always go up and up. Bad decisions such as irrational selling or dumb computerised selling should get punished.
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"Once the game is over, the king and the pawn go back in the same box."
-Italian Proverb |
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pup55
Expert
Joined: May 26, 2004
Posts: 3692
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| Posted: Wed May 07, 2008 8:25 pm Post subject: Re: Daily trading limit on Sweet, Light Crude (CL) |
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In the grains, there are rather conservative limits, example: the current limit for corn is 20 cents per bushel., and in soybeans, it is 50 cents. When exceeded, trading stops basically for the day.
About last fall, and then again earlier this year, these limits were tested daily for awhile when the market went crazy and basically doubled during that time. So, this sort of thing definitely happens.
The current market situation is such that the traders (except for Phil Flynn) are looking for any excuse whatsoever to go long on crude oil. It would be really easy for this market to freak out at some point. |
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