Oil fell on Monday, weighed down by trader concerns that the top US commodities exchange could tighten enforcement of position limits and about a US decision to impose special duties on Chinese tires. The duties could open the door for a host of trade complaints against China and raised tension between the two economic powers ahead of the G20 meeting, pressuring US stock markets.
US crude - which has been looking to stocks and macroeconomic data for signs of a turnaround in the economy and weak fuel demand - fell 43 cents to settle at $68.86 a barrel. London Brent crude traded down 25 cents to settle at $67.44 a barrel. The CME Group Inc, which runs the New York Mercantile Exchange where US oil primarily trades, on Friday sent an advisory warning to traders and brokers of tighter enforcement of existing position limits on NYMEX, CME, and other exchanges as of Sept. 14.
A source familiar with CME's plans told Reuters on Monday the advisory was routine and did not mark any shift in policy at CME on how it would enforce position limits. But analysts said the note, which comes amid growing efforts by the Obama administration to curb speculation and manipulation of energy markets, could scare some participants out of the market.
"There's a little bit of concerns or question marks about the CME notice on position limits ... with effective date of today," said Olivier Jakob of Petromatrix in Switzerland. "That might have made the market a little bit nervous and I would expect that the market is going to remain a little bit cautious until we can see through this notice."
Some oil traders said they interpreted the advisory as a CME warning it could soon offer fewer exemptions for exceeding position limits in the future. The US government has proposed imposing position limits in oil and some other commodity markets as a step toward curbing speculation and volatility following crude's record run to near $150 a barrel in 2008.
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