NYMEX Raises Margin Requirements for Crude

Friday, May 30, 2008 | 06:37 AM

Hefty increase in margin rules from the NYMEX, effective earlier this week:

The New York Mercantile Exchange said on Tuesday it will increase margins for its crude oil and related futures contracts, beginning at the close of business on Wednesday.    

Margins for the crude oil, crude oil calendar swap, and crude oil financial futures contracts will go up to $7,250 from $6,500 for clearing members, to $7,975 from $7,150 for members and to $9,788 from $8,775 for customers, NYMEX said in a release.   

Margins for the NYMEX miNY crude oil futures contract will rise to $3,625 from $3,250 for clearing members, to $3,988 from $3,575 for members and to $4,894 from $4,388 for customers. Margins for the NYMEX MACI index futures contract will increase to $1,450 from $1,300 for clearing members, to $1,595 from $1,430 for members and to $1,958 from $1,755 for customers.

That may be one source of pressure on Crude this week . . .


UPDATE: May 30 , 2008 11:00am

For all you folks who are Google-impaired:


These come from the 2008 NYMEX Press Releases.

Incidentally, this is what the Fed should have done with Stock margin requirements in 1998-99: gradually increase required capital.



NYMEX to raise margins for crude, related futures
Gene Ramos;
Reuters Tue May 6, 2008 10:25pm BST

Friday, May 30, 2008 | 06:37 AM | Permalink | Comments (8) | TrackBack (0)
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Can anyone back up this article ??
is this true ?? if so, are the peak oil guys like me doomed ??


U.S. Watchdog to probe oil trading.
U.S. watchdog to probe oil trading
20:47 EST Thursday, May 29, 2008
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OTTAWA — Facing demands for greater transparency in red-hot energy markets, U.S. regulators are taking a closer look at oil-rich sovereign wealth funds to see whether the funds are trying to drive up oil prices by pouring money into energy futures.

Bart Chilton, a commissioner with the U.S. Commodity Futures and Trading Commission (CFTC), said in an interview Thursday that he wants to ensure that state-owned funds from oil-exporting nations are not secretly manipulating markets to the detriment of U.S. consumers.

The commission, which is under pressure from U.S. Congress to cool the speculative heat in commodity markets, announced Thursday that it will collect more information from traders and work with British regulators to bring overseas markets under scrutiny.

It also announced that it is conducting a U.S.-wide investigation into the crude oil and related derivative markets to determine whether there was price manipulation during the unprecedented run that saw the price on the New York Mercantile Exchange climb from around $60 (U.S.) a barrel last spring to a close of $126.62 Thursday.

In a statement, the commissioners, led by chairman Walt Lukken, said consumers and business are “significantly affected” by higher energy prices.

“The commission is taking important steps to ensure that the U.S. energy markets function properly and operate free from manipulation and abuse.”

Mr. Chilton has been leading the fight on the commission to gain more oversight over both domestic and foreign markets.

In both these markets, speculators can trade “look-alike contracts” that track the Nymex and influence U.S. prices.

Critics argue that excessive speculation has added as much as $35 to the price of a barrel of crude oil.

In a letter to four U.S. senators sent earlier this month, Mr. Chilton warned of the possibility that foreign wealth funds could be undermining energy markets.

“Certainly we should be cautious about any [sovereign wealth fund] investments that are motivated by inappropriate objectives of the controlling government,” he wrote.

In a telephone interview from Washington, he said the current system makes it impossible to identify and track such investment.

“I'm certainly interested in seeing more data on sovereign wealth funds and ensuring they're not having some disproportionate impact on the market,” Mr. Chilton said.

“It's our job to look at things and see what's going on, particularly when prices are so high and impacting residents in such a big way.”

Saudi Arabia and the oil sheikdoms of the Persian Gulf, such as Abu Dhabi, are amassing vast funds as a result of record crude prices and are recycling those windfall profits back into Western economies through direct and indirect investments.

Norway's $400-billion fund, which reports its holding publicly, will soon own 1 per cent of all European equities – an indication of the growing financial clout of the world's major oil producers.

With oil and other commodities at record levels – and speculators being blamed for at least some of the increase – Congress has passed legislation to increase regulatory oversight.

Congress voted recently to end the so-called “Enron exemption,” which allows electronic exchanges set up for large traders to operate without any federal regulation.

The exemption was passed into law in December, 2000, at the behest of executives at now-defunct Enron Corp., in order to facilitate their controversial aggressive natural gas trading.

Shane Sweet, executive director of the New England Fuel Institute, said his group, which represents heating fuel companies, has lobbied hard to get additional regulatory oversight of overheated energy markets and was encouraged by Thursday's announcement.

However, he is not expecting an immediate or dramatic decline in prices.

“This is not the cure for cancer. I don't think there's a single magic bullet that is going to restore some sense to this market,” he said.
© Copyright The Globe and Mail

Posted by: rickrude | May 30, 2008 6:59:53 AM

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