Minutes before US President Donald Trump posted on Truth Social about “productive” talks amid the war with Iran, traders placed bets worth over half a million dollars in the oil market, the Financial Times reported Monday.
Around 6,200 Brent and West Texas Intermediate futures contracts changed hands 15 minutes before Trump's post, which sent crude oil prices below $100 and made other assets volatile. The trading took place between 6:49 AM and 6:50 AM New York time on Monday, a quarter hour after the postsaid there had been “productive conversations” in recent days with Tehran to end the war in Iran.
According to the FT report based on Bloomberg data, the notional value of these trades was $580 million.
Trading volumes for both Brent and WTI skyrocketed 27 seconds before 6:50 AM, all at the same time, raising suspicions. Futures tracking the S&P 500 share index also leapt in these price moments after the oil trade, with volume rising significantly during the period.
It was immediately unclear whether a single entity or several entities made the oil bets during this time.
“It’s hard to prove causality... but you have to wonder who would have been relatively aggressive at selling futures at that point, 15 minutes before Trump’s post,” a market strategist at a US broker was quoted as saying about Monday's trade by FT.
Large bets surge ahead of official announcements
Several hedge funds also noted that this was one of many recent examples in which traders placed numerous bets ahead of official US government announcements.
According to a trader at a major hedge fund cited by FT, energy consultants have, in recent times, noticed multiple block trades that they found to be unusually timed.
Another portfolio manager said the series of large, well-timed trades had led to a “level of frustration” among investors.
“My gut from watching markets for the last 25 years is this is really abnormal,” he added. “It’s Monday morning, there’s no important data today, and there aren’t any Fed speakers you’d want to front-run. It’s an unusually large trade for a day with no event risk… Somebody just got a lot richer,” this person was quoted as saying by FT.
Crude oil volatile
Crude futures have been highly volatile as the market reacts to ever-shifting headlines on the status of the war in the Middle East, which has effectively closed the Strait of Hormuz.
Following Trump's comments on a possible de-escalation, Iran denied any talks had been held. “No negotiations have been held with the US,” Iranian parliament Speaker Mohammad Bagher Qalibaf posted on X, adding that “fake news is used to manipulate the financial and oil markets.”
Oil prices briefly fell below $100 a barrel after Trump claimed his government was in talks to end the war. But that respite was short-lived, with Brent crude, the international benchmark, back at $104 a barrel in morning trading.
Key Takeaways
- Unusual trading patterns can indicate potential insider trading or market manipulation.
- Market reactions to geopolitical events are often volatile and can lead to significant financial implications.
- Traders and investors should be cautious of unusually timed trades that precede major announcements.
