Oil contracts worth $1.7 billion changed hands in the hour before an Axios report sent oil prices lower Wednesday. Some experts are calling the spike in activity suspicious.
Some said a spike in trading volume in the oil market on Wednesday looked suspicious.
Trading volume in U.S. crude-oil futures suddenly spiked early Wednesday in the hour before a media report sent prices tumbling - the latest in a pattern of suspicious activity in the market for oil futures that has emerged since the start of the conflict in Iran.
At around 4:50 a.m. Eastern time, Axios published a report, citing U.S. officials, that the White House believed the U.S. and Iran were nearing a deal on a one-page memorandum to end the fighting and set a framework for future talks toward a nuclear deal.
President Trump has repeatedly said that the U.S. and Israel decided to attack Iran in late February in an effort to ensure Iran would never be able to develop a nuclear weapon.
Beginning roughly one hour before the report hit the newswires, trading in front-month West Texas Intermediate crude-oil futures (CL00) (CL.1) suddenly spiked. Roughly 17,300 contracts with an estimated value of more than $1.7 billion changed hands during this time, with the bulk of activity occurring before 4:10 a.m. Eastern, according to Dow Jones Market Data. Trading volume spiked again shortly after the Axios report hit the newswires at around 4:50 a.m. Eastern.
Several oil-market experts told MarketWatch that the activity looked like somebody with advanced knowledge trading ahead of the report. Axios and the White House didn't return requests for comment.
Bloomberg reported last month that the Commodity Futures Trading Commission was looking into a pattern of suspicious activity in the oil market around market-moving Truth Social posts and media reports. A representative for the CFTC told MarketWatch on Wednesday that the agency doesn't confirm or deny investigations.
Trading volume during the early hours of Eastern Standard Time is usually pretty subdued, said Gregory Brew, a senior analyst at Eurasia Group who is focused on energy markets and Iran. He added that he believed this morning's crude-oil trading activity was suspicious.
"This looks like a high volume of trading in the early morning, which is unusual," Brew told MarketWatch.
Other energy-market experts agreed.
Ilia Bouchouev, former president of Koch Global Partners and a leading energy-trading expert, also said that the early-morning trades today were suspicious. He added that today's action was perhaps slightly less brazen than previous oil-market activity because the trades today occurred during London morning hours. He referred to suspicious trading on April 7 that took place before morning trading in London normally picks up.
"But obviously the pattern of foul play continues," Bouchouev said in an email to MarketWatch.
Two longtime energy traders - who asked for anonymity because they were not authorized by their employers to speak publicly - said the activity looked suspicious enough to undermine confidence in the market. They also noted that definitively proving who made these trades, and whether or not they were inspired by insider knowledge, would be difficult.
Recently, a pattern of suspiciously timed trades placed on prediction markets and the oil futures markets have caught the attention of members of Congress. On Wednesday, Massachusetts Sen. Elizabeth Warren posted to X a link to a Guardian story from last month highlighting some of these examples.
"Was that just luck? Looks like insider trading to me," she said. MarketWatch has reached out to Warren's office for comment.
On April 7, right before President Trump announced a temporary cease-fire with Iran, traders bet $950 million that oil prices would come down, according to a report in the New York Post. About a week later, suspicious oil trades worth $760 million took place in the 20 minutes before Iran announced that the Strait of Hormuz would stay open to commercial shipping. Tanker traffic through the strait has been heavily constrained since the conflict began.
There have also been allegations of insider trading in prediction markets tied to the conflict, as MarketWatch reported back in March.
Front-month WTI oil futures fell $7.19, or 7%, to $95.08 a barrel on Wednesday, while U.S. stocks DJIA SPX COMP traded higher on hopes for a permanent end to the conflict.
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