top of page

Did a fat finger sink WTI crude oil 7% in seconds? Forex education for beginners GB

West Texas Intermediate plummeted by almost $5 a barrel for a few seconds shortly after the open in Asia at 6 a.m. in Singapore, then recovered. When trading kicked off a couple of hours later in global benchmark Brent, it failed to respond in kind, merely shedding a little more than $1 a barrel.

What's is the Asian market trading session?
The Asian market trading session, also known as the Asian session, refers to the period of time during which financial markets in Asia are open for trading. It typically starts around 7:00 a.m. Tokyo time and lasts until around 4:00 p.m. Hong Kong time, although the exact trading hours may vary depending on the exchange.
During the Asian session, some of the major financial markets in the region are open for trading, including the Tokyo Stock Exchange in Japan, the Hong Kong Stock Exchange in Hong Kong, the Shanghai Stock Exchange in China, and the Singapore Exchange in Singapore, among others.
The Asian session is an important time for trading as it overlaps with the European and American trading sessions, allowing for increased liquidity and trading activity. It is also a time when important economic data releases and news announcements from Asia can impact global financial markets.

Oil drops 7% in seconds.

Puzzled traders and analysts suggested myriad possible factors but none was definitive: speculators abandoning bullish bets; a possible fat-finger trade; algorithmic selling; and even a giant options position earlier this week that now looks to be loss-making were all touted as explanations. The fact the activity coincided with a spike in gold volume led some to speculate a large macro player had liquidated positions.

“My first thought was that it must have been a fat finger,” said Warren Patterson, head of commodities strategy at ING. “But it could just have been someone closing out, and that kind of volume is going to be felt at that time.”

What is a "fat finger" you may ask?

WTI crude oil  forex currency and commodities price bar chart with green & red candles showing a trading trend over a 4 hour time frame; indicators include moving average and Bollinger bands plus Relative strength indicator.

In trading, a "fat finger" refers to a human error made while entering a trade order, usually caused by mistyping or pressing the wrong button on a keyboard or trading software interface.

For example, if a trader intends to buy 100 shares of a stock but accidentally types "1,000" instead of "100" when placing the order, this would be considered a "fat finger" error. The resulting order would be for 10 times the intended amount, potentially causing significant unintended consequences for the trader and the market.

Fat finger errors can have serious implications for traders, as they can result in unintended losses or gains, and can also affect the wider market if they cause sudden and unexpected movements in prices or volumes. Many trading platforms have safeguards in place to prevent or mitigate the impact of fat finger errors, such as order confirmation screens and limits on the size of orders that can be placed.

Another seasoned market watcher in Singapore, Vandana Hari, talked of “panic selling.”

The rapid swoon and swift retracement is the latest wild swing in a tumultuous six-week period in the global oil market, with prices surging on OPEC+ supply cuts only to be dragged back down by concerns that slower global growth and US banking worries will eviscerate demand and sap risk appetite.

The bizarre drop came in early Asian hours, often some of the thinnest trading moments. Still, the timing was unusual. Normally, sharp moves happen right at the open, exemplified by the surge that followed the recent OPEC+ reduction. This time, however, it took a few minutes before prices shifted substantially.

In the fifth minute of the session, more than 3,000 June futures contracts changed hands. Over that span, prices suddenly plunged by more than $3 to hit a nadir of $63.64 a barrel, the lowest intraday level since late 2021. Just three minutes later, WTI futures were back at $66 a barrel, and it then took little more than three hours for prices to eventually turn higher on the day.

While WTI trading appeared to stop for about 10 seconds, according to Bloomberg data, there were no circuit breakers triggered, a spokesperson for CME Group said.

The scale of the move will raise fresh questions about the health of liquidity in the market, particularly given the move was concentrated in WTI, while Brent remained insulated. Thinner volumes and outsized price moves have been a key feature in commodities markets, when elevated margins reduced activity.


Die Kommentarfunktion wurde abgeschaltet.
bottom of page