2008-09-22
Amazing Jump
Oil prices soared more than $25 at their intraday high and finished with a gain of $16.37, or 16%, at $120.92 a barrel as the dollar was hammered.
Some one at the market must be slaughtered without any sympathy. Look at last week’s economic situation, the stock market is so volatile. Traders are hard to figure out the future will be like. In the commodity field, people are very sensitive and are worried about the economics. If there is no such high demanding future, well…………. the price has to be dropped. So that is what had happened last week. Many traders short the position and predict the the price will keep going down. Now they have to put the price flat and buy back the October crude oil with the ridiculous price. Again, this is totally speculation, lots of people are dead today, since they are squeezed into such a small space to forced to pay. Fortunately, we did not get margin call 
Look at NG, the price is always aligned with CL. Today is an exception, apparently today is not NG’s expiration day. And recently, those two major commodities will become not very correlated. I think in the future, their correlation will be changed a lot especially after we get the result that who will be the new president.
The last I want to say, OK if you are using VaR, your number must be bursted, otherwise there must be something wrong. Today is not a normal market situation.
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