“If large trading houses have long positions, they may pare some of those positions to meet these margin requirements, and that would drop the prices,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.
Crude-oil futures for June delivery fell 2.1 percent to $103.04 a barrel at 11:45 a.m. on the CME’s New York Mercantile Exchange, after dropping to the lowest price in more than a week. Gold futures for June delivery slid 1 percent to $1,636.80 an ounce on the CME’s Comex in New York.
Obama has asked Congress to fund a six-fold increase for surveillance and enforcement staff at the CFTC to put “more cops on the beat” overseeing oil markets. He is seeking to give the CFTC authority to raise margins for traders’ positions and stiffen civil and criminal penalties for businesses guilty of manipulation to $10 million from $1 million.
“Basically, we don’t see any impact on the market from the latest revision,” said Richard Gorry, a Singapore-based director at JBC Energy GmbH, an energy research company. “There might be some smaller players that could be forced out of a trade more quickly, but we don’t think that it will have any type of meaningful effect on the big boys.”
Because the rule affects only exchange members, “the impact on the market is relatively minimal,” said Kyle Cooper, the director of commodities research at IAF Advisors in Houston. “Members trade, but they are still small in relation to the whole market.”
--With assistance from James Poole, Ann Koh and Luzi Ann Javier in Singapore, Silla Brush in Washington and Moming Zhou in New York. Editors: Steve Stroth, Millie Munshi