These commodity market blowups are becoming all-too-familiar in the last few years. Many theories exist as to why the price of crude oil zoomed from about $120 a barrel in mid-May to threaten the $150 mark in mid-July, only to sharply reverse that trend in the last week.
But one emerging story revolves around SemGroup, an oil marketing firm that filed for bankruptcy, disclosing heavy losses on short positions in crude oil that they were forced to reverse as the market’s gains went from steady to accelerated to explosive.
It wouldn’t be the first time that a long, ongoing bull-market rally in a commodity turned into a buying frenzy, fueled at first by speculators caught up in the mere expectation of higher prices, later by the same smelling someone on the wrong side of the trade trying to get out of their positions, such as what seems to have happened with SemGroup....MORE
James Bianco, a respected fixed income analyst at Arbor Research, was so kind as to pass along his observations about the retreat in oil prices from his morning research note. "Is This Why Crude Oil Is Getting Slammed?":...