Chapter 1193: Net profit of over 500 million US dollars!
Soon, the price of New York light crude oil futures quickly broke through the 29 US dollars per barrel mark and continued to fall.
In theory, the price of futures should be higher than the price of spot.
This is because the futures price = spot price + related costs.
These related costs include storage fees, management fees, interest on capital occupation, etc.
Therefore, the futures price should be higher than the spot price, and the crude oil futures price should not fall below $29 a barrel.
But nothing is absolute, and theory is ultimately just theory.
What's more, oil futures are very different from other commodities, and it is normal for the futures price to sometimes diverge from the OPEC price.
After all, although OPEC occupies an absolute leading position in the international oil market, and even rides on top of European and American countries, it does not mean that the OPEC price is 100% guiding.
In later generations, it was common for the futures price of oil to diverge from the spot price of oil.
At this time, OPEC lowered the price of oil and announced an increase in production, which infringed on the interests of oil-producing countries such as Latin America.
But don't think about it. Now oil-producing countries such as Latin America are pretty much barefoot, heavily in debt, and can only rely on exporting oil and minerals to increase their income.
In order to survive, it's better to sell cheaper than not sell at all, isn't it?
Therefore, the vast majority of institutions have judged that OPEC's lowering of oil prices will only force non-OPEC oil-producing countries in Latin America, except Venezuela, to lower prices even further!
Although Latin American countries have not yet reacted, this general trend is certain!
In order to eliminate debt, Europe, the United States and other countries will also give priority to purchasing oil from Latin American and other debtor countries.
Therefore, the futures contract price of $29 a barrel is not the bottom line at all!
Major short sellers seize the opportunity to suppress prices massively, trying to force long positions to close out!
According to the 5% margin rate, many long positions were opened at a price of more than $30 a barrel. As long as the price falls below $28.5 a barrel, the vast majority of long positions will have to be closed out, and there will not even be time to make margin payments!
...
'Hurry, hurry, hurry, close out the positions quickly!'
The atmosphere at Nomura Securities' New York branch was extremely tense, especially in the department responsible for directly operating oil futures, everyone was on tenterhooks.
Even Nomura Securities' New York branch president Ishikawa Shu were personally in command.
After all, at the beginning, Nomura Securities only invested a margin of $100 million to go long on oil futures, but then the short position increased significantly, and Nomura Securities invested another $50 million to cover the position at $29.96 to go long.
So in total, Nomura Securities had invested 150 million US dollars, which was magnified to 3 billion US dollars for operation.
After OPEC announced a reduction in oil prices, losses were already destined. Ishikawa Kijin's goal was to hope that the losses could be smaller.
But who knew that the short attack was so fierce that just over two minutes after the opening, the price was driven below 29 US dollars.
And there were still a steady stream of low-priced sell orders in the market, with prices getting lower and lower, but no institution was buying!
It was clear that the price had not yet fallen to the psychological price level of the institutions that wanted to buy the bottom, and it was not yet time to enter the market.
But Nomura Securities couldn't wait!
As he watched the price rapidly fall to 28.75 US dollars a barrel, Ishikawa Shu's muscles tightened and his whole body became tense!
Because the first batch of contracts worth 2 billion US dollars that he bought were opened at 30.18 US dollars a barrel.
If he cannot reduce the position, and the price falls to 28.68 US dollars a barrel, then the 100 million US dollars in margin will be equal to the floating loss!
Once it drops to 28.67 US dollars a barrel, the floating loss will be greater than the margin, and the position will be liquidated!
And the second time, a billion-dollar contract was bought at the position of 29.96 US dollars a barrel, and the closing price was 28.47 US dollars a barrel. If it drops by another 0.01 US dollars a barrel, the position will also be liquidated!
But now, a total of 3 billion US dollars worth of oil futures contracts have not been sold!
They are all still in hand!
'President, the funds have been mobilised, do you want to make a margin call immediately?'
Just then, Xiaodao Feng, the manager of the oil futures trading department, hurriedly came to Ishikawa Juren's side and quickly reported.
Ishikawa Juren's eyes were wide open, his eyes full of bloodshot veins, and his gaze was fixed on the curve.
28.73 US dollars!
28.71 US dollars!
The downward momentum is still rapid!
Ishikawa Shuren shook his head violently and made a difficult but wise decision. With a hoarse voice, he said, 'No, let it burst!'
Kojima Feng clenched his fists, then released them, and answered with a heavy heart, 'Yes!'
In fact, at this point, whether or not to make a margin call would not help.
The position could never be closed, and even if it was forcibly closed by the exchange, it might still not be closed. So why bother to make a margin call?
It is better to let the exchange force a liquidation, at least there is a chance to get out first and sell at a higher price.
In this way, after losing the margin, they will have less money to make up.
It is better to keep the money in hand first, at least you can have more initiative. There is no way to save these $2 billion contracts. There is no need to struggle.
After a few seconds, the price dropped to 28.67 US dollars a barrel, and the floating loss exceeded the margin of more than 100 million US dollars, instantly triggering the exchange's mechanism to close the position forcibly!
And that was not the end!
The price of New York light crude oil futures continued to fall, making Ishikawa's nerves even more tense.
But at this time, he felt very powerless.
In the face of this general trend, there was nothing he could do. The most he could do was perhaps just pray.
He prayed that the price would not break through 28.47 US dollars a barrel, otherwise another billion US dollars of contracts would also be blown out of the water.
But sometimes, the more you don't want something to happen, the more likely it is to happen.
During the period of high volatility some time ago, although there were many changes, whether long or short, the profit margin would not be too large.
Even because of the large fluctuations, the profits made earlier had to be given up later. Therefore, no matter whether it was short or long, the profits made were not large.
This time, with the right timing and the help of OPEC, the bears are not going to do their best to reap the benefits?
Therefore, 16 minutes after the New York Mercantile Exchange opened, the price of New York light crude oil futures fell below 28.46 US dollars a barrel, and Nomura Securities once again had a margin call!
And the futures price continued to fall!
Ishikawa Shujin was desperate, and in the end it still fell below!
Where there is sorrow, there is joy.
The Tiger Fund and Bridgewater Fund were naturally the happy party.
When the price of New York light crude oil futures fell to 28.14 US dollars a barrel, the two funds successively opened positions to buy futures contracts to hedge their previous short positions.
The two funds together held more than 8 billion US dollars worth of futures contracts, all of which were opened at 30.15 US dollars a barrel.
Now that they have opened positions to buy at 28.14 US dollars a barrel, they have quickly bought a large number of sell orders.
After buying the same amount of futures contracts, the two funds made a total profit of 533.33 million US dollars!
As for Nomura Securities, although the first batch of contracts, which cost 2 billion US dollars to buy, were closed at a price of 28.67 US dollars a barrel, the second batch, which cost 1 billion US dollars to buy, were closed at a price of 28.46 US dollars a barrel.
However, the price was kept lowering, and they were not sold until Bridgewater and Tiger Funds bought them.
Therefore, in addition to losing the margin, Nomura Securities had to pay compensation, otherwise it would have its futures trading seat cancelled and face other troubles.
Together with the additional losses, Nomura Securities' cumulative losses reached a whopping 195.94 million US dollars!
This is just over one tenth of the total assets of Nomura Securities' US branch!
Ishikawa Juren immediately covered it up, fearing that if the news were to be exposed, it would cause huge trouble for the company!