Did A Huge Commodity Fund Blow Up Wednesday Afternoon?
Markets took a beating on Wednesday. This week, NYMEX Light Sweet Crude Oil futures fell below the $30 level and commodity-exposed names have been the wet dog in January.
At the cash close for oil futures at 2:30 p.m. ET on Wednesday, there was a massive sell program running various stocks.
Sources participating actively in the oil trade, both physical trading and warehousing, told Benzinga an unnamed fund forced by NYSE to liquidate at the 2:30 p.m. cash close for oil was the culprit of the massive selloff in S&P 500 futures.
This was seemingly done to mask the selling. Eric Hunsader of Nanex commented on the possibility of unique trading indicating a forced liquidation. He said he saw “no panic selling” and followed up by saying that if there was a planned liquidation, it was likely orderly and flew under the radar.
The past few months have seen many funds coming under pressure. SAB Capital Management returned client money, Renaissance Technologies closed a $1 billion fund, Third Avenue liquidated its Junk Bond fund, the list goes on. The standout is Nevsky Capital, which closed a $1.5 billion fund just eight days ago.
Tangent to a potentially forced liquidation event, two unidentified hedge funds have been absent from the trading floor since the holidays, according to the same sources.
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