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Page added on October 12, 2013
Oil Traders Misread Tweet, Oil Prices Spike
“Ahh Twitter. Sometimes when you combine lightening fast information distribution and humans, minor (or not-so-minor) chaos can ensue. Yesterday, the Israeli military tweeted a commemoration of the 40th anniversary of the Yom Kippur war, which took place in 1973. But the tweet referenced the bombing of Syrian airports by Soviets, and oil traders, already an antsy group, assumed the tweet referred to an attack occurring that very moment. As you can imagine, this had some impact. Within an hour, the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared. In the end, the traders missed a few things that would identify the tweet as historical vs imminent: Yom Kippur was weeks ago, the Soviet Union is no more, and most important, #checkthehashtag.”
3 Comments on "Oil Traders Misread Tweet, Oil Prices Spike"
rockman on Sat, 12th Oct 2013 6:57 pm
“Within an hour, the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared.”
Actually the price of oil didn’t change. What changed was the price of the oil futures. Which means that SOME of folks making a bet on the future prices of oil changed their expectations. But that new bet may prove to be correct even though that would have nothing to do with the reason behind the bet. And it’s good to remember that for all the folks betting on a price increase based on that tweet there were those betting just the opposite.
No different then someone betting against a football team because their lead quarterback gets hurt. And then lose their butts when the second
stringer throws the best game of his life. At least at a casino they print the odds of winning out for you…the futures market doesn’t.
BillT on Sun, 13th Oct 2013 3:56 am
rockman, nice of you to point out the facts to those who don’t understand the financial system. I am still learning and do not participate in any of them, but, I do enjoy knowing how they work. Thanks.
rockman on Sun, 13th Oct 2013 10:34 am
Your welcome Bill. I know just enough about the futures market to be moderately dangerous. IMHO the complex financial dynamics are much more difficult to get a handle on the geology and reserves.