|
From ft.com: After years of strong growth, liquidity in commodities futures markets, particularly crude oil, is falling abruptly as the credit crunch finally hits leveraging in the sector and contributes to a sharp increase in price volatility.
The number of outstanding contracts - known as open interest in industry jargon - in key US commodities markets has fallen 5.5 per cent since March and is now at its lowest level since January, according to Barclays Capital estimates.
In oil, open interest has fallen to its lowest in more than a year and a half. Analysts and traders say the reduction in liquidity has been brought about by financial institutions deleveraging - particularly among cash-squeezed Wall Street banks - fresh worries about global economic growth that has triggered liquidation of positions, and potential new US legislation in commodities markets......Full Article Source |