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Businesses Communications Social Networks The Almighty Buck Twitter

Oil Traders Misread Tweet, Oil Prices Spike 91

Posted by timothy
from the where-the-humans-come-in dept.
cartechboy writes "Ahh Twitter. Sometimes when you combine lightning fast information distribution and humans, minor (or not-so-minor) chaos can ensue. Yesterday, the Israeli military tweeted a commemoration of the 40th anniversary of the Yom Kippur war, which took place in 1973. But the tweet referenced the bombing of Syrian airports by Soviets, and oil traders, already an antsy group, assumed the tweet referred to an attack occurring that very moment. As you can imagine, this had some impact. Within an hour, the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared. In the end, the traders missed a few things that would identify the tweet as historical vs imminent: Yom Kippur was weeks ago, the Soviet Union is no more, and most important, #checkthehashtag."
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Oil Traders Misread Tweet, Oil Prices Spike

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  • #idiots (Score:5, Insightful)

    by Anonymous Coward on Friday October 11, 2013 @06:25PM (#45105669)

    Anyone getting their investment advice from Twitter deserves what they get.

    • by arbiter1 (1204146)
      yea but you realize that price spike just get passed down to end customer right? so their screw up is just passed along to someone else to pay for.
      • Re:#idiots (Score:5, Insightful)

        by jonbryce (703250) on Friday October 11, 2013 @07:18PM (#45106003) Homepage

        A $1 movement in oil price is just noise as far as real buyers of oil are concerned. In any case, they buy their oil on the futures market, not the spot market.

        • Yes, the real question is why are oil prices so high, when there has never been such a glut of oil on the market, with the largest proven reserves, ever.

          It is also as if there were some organization like debeer's for oil...

          • Just so we're on the same page—you do know about OPEC [wikipedia.org], right?
            • by sjames (1099)

              Yes, but OPEC doesn't control the majority of the oil out there.

              • by petman (619526)

                Yes, but OPEC doesn't control the bulk of the oil out there.

                "Majority" is used for countables. Use "bulk" for uncountables.

          • Re: (Score:3, Insightful)

            by Anonymous Coward

            Then short oil futures. If you are so sure its a bubble, it will come crashing down and you can make money off of it. If you don't short oil, it shows you don't have confidence it is a bubble and that maybe the price is up there for reasons you don't fully understand.

            I have used this strategy before and made a killing from it. Many times things are bubbles or wrongly smeared in the news and you can buy/sell and put your money where your mouth is. I personally wouldn't short oil because there are things

          • Re:#idiots (Score:5, Insightful)

            by thegarbz (1787294) on Saturday October 12, 2013 @02:40AM (#45107331)

            Proven reserves are variable and depend on price. i.e. if the price of oil dropped down to $50/bbl then it's no longer profitable to crack tarsands and the so called proven reserves go down.

            The high proven reserves are part of the high dollar. A lot of this stuff is either shit (sour, acidic, heavy) or is in hard to reach places which would be worthless if the the dollar wasn't lower. This is the same reason why "peak oil" would never actually resemble a peak.

    • by Anonymous Coward

      True for investors, but not for trader and speculators, which is what most "investors" actually are. Market speculation is about psychology and information availability, and if you're going to play that game, you damn well should follow Twitter.

    • The traders actually make money on this though. The oil companies will also make more money from refining the oil. It is we the consumers who will lose money.
    • by 228e2 (934443)
      Technology-wise, twitter is the same as any RSS feed, so why alienate Twitter?
    • Oh, absolutely. But the dark side of this one is all the people affected by it who don't deserve to have their cash hinge on someone else's obvious mistake.
    • by tlhIngan (30335)

      Anyone getting their investment advice from Twitter deserves what they get.

      The problem is, twitter and facebook tend to be one of the first places where news breaks out first, and investments often follow the news.

      In the race to figure out what the market is doing earlier and earlier, ignoring places where news breaks out first is folly.

      Of course, the flip side is that getting the latest and greatest news means very little has been checked and may not even be accurate.

    • Anyone getting their investment advice from Twitter deserves what they get.

      I'm sure the IDF bought some oil futures before submitting the tweet just to be sure. :-)

    • You mean the computers that handles high frequency trading?

  • " the traders missed a few things "

    Maybe it was intentional - I'm sure someone profited, after all.
    • Re:Maybe not (Score:5, Interesting)

      by adamchou (993073) on Friday October 11, 2013 @06:52PM (#45105845)

      Within an hour, it had jumped more than $1, from $110.40 to $111.50.

      it jumped 1%. that's hardly significant. in fact, that's just pretty regular. this is a stupid article. who the hell approves this crap?

      • it jumped 1%. that's hardly significant. in fact, that's just pretty regular. this is a stupid article. who the hell approves this crap?

        I wouldn't mind a daily 1% increase in my wealth.

        • by adamchou (993073)
          all the various investment markets jump or decline well over 1% on a regular basis. there's your change, go get em.
        • I'd pass on having my money increase by 1% each day. I have major student loan debt problems.
      • by kick6 (1081615)

        Within an hour, it had jumped more than $1, from $110.40 to $111.50.

        it jumped 1%. that's hardly significant. in fact, that's just pretty regular. this is a stupid article. who the hell approves this crap?

        We're not allowed to make fun of wall street assholes getting caught being assholes because they amount doesn't meet some unmentioned asshole percentage?

      • by Richy_T (111409)

        Yeah. Try investing in Bitcoin. It's not unusual to see a 1% shift not only before breakfast but also during and after. Heck, it can shift 2% just while you're getting the milk from the fridge.

      • by Nikker (749551)
        This. With all the aggregate data used in the day to day life of a trader how exactly does this one tweet become the defacto reasoning for the price change?
  • Since I am a longer-term investor and not a twitchy day-trader, this kind of thing doesn't affect me at all. The great thing about the stock market is that it is instantly and severely self-correcting. I just wish I could get in on more of these mis-pricings on time, as these failures are usually excellent opportunities, if, as I said, I watched the markets every second of the day.
    • Re:Trading term (Score:5, Insightful)

      by Anonymous Coward on Friday October 11, 2013 @06:37PM (#45105755)

      "I just wish I could get in on more of these mis-pricings on time,"
      That would make you a twitchy day-trader.

    • Not sure if it was clearly stated, but High Frequency Trading algorithms should take most of the blame. Computers ran by investment firms monitor social media and invest accordingly, so you don't have to actually watch the ticker with your finger on the button. Large funds you have (401k, IRA) are likely already doing this for you.
      • by MightyYar (622222)

        I'm not sure it was computers. While it is conceivable that they have written a twitter bot that waits for news from Israel about conflicts in the Middle East, I'm not sure that the Israeli military Twitter feed would be a source of timely information in case of an actual attack.

        • by anubi (640541)
          Sure sounds hackable. Just a few bytes of information relayed through Twitter could make the instigator a lot of money from people who willingly sign their resources over to them.
      • >> Computers ran by investment firms monitor social media and invest accordingly

        Yes, but they are no match for my random headline writing bots.

      • by Sarten-X (1102295)

        HFT doesn't take an hour to move 1%. I've worked in a financial firm, in the trading department. What takes an hour is for the head advisor to misunderstand something, make a (snap) decision, and pass it to the account managers, who count up how much of the investment to trade, and pass the numbers on to the trading desk, who calls in the trade, and it's done a few milliseconds later.

        Seeing that much money move at once is what triggers the HFT algorithms, which will then buy and sell the commodity across di

      • by khallow (566160)

        Not sure if it was clearly stated, but High Frequency Trading algorithms should take most of the blame. Computers ran by investment firms monitor social media and invest accordingly, so you don't have to actually watch the ticker with your finger on the button.

        That's not HFT. For example, those groups could still do that even with five minute trading intervals as some have suggested here as a supposed "cure" for HFT. HFT would just mean that they could do it on the time scale of milliseconds.

      • by tompaulco (629533)
        Not the 401k and IRA funds that I invest in. Mine are mostly either in smallcaps and index tracking stocks. They tend to buy and hold.
        I used to be in the Futures market. Sure you could make a little bit more constantly buying and selling, but the transaction costs and hassle made it barely worthwhile. For a lot less stress and barely less money, you could just buy and hold and adjust your portfolio once every few months.
    • Re:Trading term (Score:4, Interesting)

      by MickyTheIdiot (1032226) on Friday October 11, 2013 @06:45PM (#45105797) Homepage Journal

      I do the "dollar cost average" thing, putting some money in every paycheck. I specifically don't read my account statements except once a year or so for this reason. The stock market always goes up in the long term. Even if it drops for a year it'll be fine. I won't be taking money out until I retire, and that won't be for at least another 25 years... it's best to not pay attention, in my opinion.

      • Re:Trading term (Score:5, Insightful)

        by Ol Olsoc (1175323) on Friday October 11, 2013 @09:01PM (#45106469)

        The stock market always goes up in the long term.

        Oh yes.

        Even if it drops for a year it'll be fine. I won't be taking money out until I retire, and that won't be for at least another 25 years... it's best to not pay attention, in my opinion.

        That's a little simplistic. I know many folks who were just about wiped out, right around the time they retired. Yes, the market always goes up. And that is an awesome investment strategy if you are going to live for 200 years. For us mere mortals, where it's at when we retire - or move it into less volatile investments is much more important.

        If you plan on moving your investments into something more conservative at some point, where is the market going to be at that point? I know one fellow who hung on a bit too long, and was bit hard twice.

        I lucked out and went conservative pretty early on - way too early for most. I was an imbecile for about a decade. Sad to say, my smart colleagues who knew the market only went up in the long run are now planning on working into their 70's. Hopefully they will be allowed to do that. Me, I retired on my terms at 56.

        Invest well, save well, live well, but well below what the economic forces tell you to.(real estate people, investment people, banking people) Pay attention to your stocks. Constant monitoring is only a problem if you get greedy, and too many people cannot not be greedy. The vampires and leeches feed on that greed, and do a slam bang job of extracting your wealth.

        • by steelfood (895457)

          Dow, adjusted for inflation. [earthlink.net]

          If you'll look at the big chart at the link, you'll notice that the people who bought in at the height of the stock market in the 1920's didn't make their money back until 1960. And then actually went back into the red during the most recent crash.

          You can argue if the DJIA is an accurate representation of market as a whole, or of the specific stocks in your portfolio. But you can't argue that even without factoring the capital gains tax, you're probably going to lose. With the ca

          • "Adjusting for inflation", sure, but you have to compare that to my savings account adjusted for inflation always seems to go down.

      • The stock market always goes up in the long term.

        If you invested your money in stock markets a century ago, it would have been a relatively poor investment. The United States of America was the "winner" of the 20th century, both militarily and economically, so of course the American stock market was a very good investment. But without the benefit of hindsight, you would have had no reason to know that. A century ago the "hot" stock markets were Argentina and Russia, while the "safe" market was Germany. Well, $100 invested in 1913 Russia or Germany wo

      • Putting money in every paycheck is great and exactly the way to go, but isn't "dollar cost averaging". Dollar cost averaging is something else and entirely bogus.

        Suppose you get $120K. DCA advocates would tell you to invest, say, $10K of it every month into your preferred asset allocation, rather than investing it all at once.

        On the other hand, suppose your cat walks over your keyboard while you're logged into your brokerage and sells $120K of stock. Do you invest it $10K at a time or do you just reverse yo

  • Brian Hunter [wikipedia.org] hadn't been born yet, and didn't know his history.
  • probably what happened is their algorithm (high frequency trading) read the tweet wrong and bought it without human oversight. a tweet like that would cause some ai to buy since war = higher oil cost.

  • The real question is however how we, as a society, place so much power in the hands of stupid people. Politicians, obviously, are another case, but so are apparently nuclear commanders....

    • by WillAffleckUW (858324) on Friday October 11, 2013 @06:59PM (#45105901) Homepage Journal

      I think you're confusing the following:

      1. Investors - which is most of everything

      2. Traders - people and their agents who trade

      3. Robot programs which trade based on twitter and facebook and newsfeed key words

      4. Derivatives - which is a fancy word for Legalized Gambling

      While they can overlap, they are not the exact same groups. Most investors know that active management is more risky and tends to be less profitable to actual investors than index trading, precisely for that reason.

      • by DCFusor (1763438)
        I'm a pro trader - but only with my own dough. It was the machines reading headlines. The guys who program the algos are ignorant, and wouldn't have passed my college DSP course. In fact, they mostly have physics degrees, but couldn't get a "real job", and semantics and stuff like that would be way past them anyway. Real debacles like Knight trading accidently deploying their market trading test horse rather than their real algos - now there's a huge chance for humans with a lick of sense to make real m
    • At least we can kick politicians out. We have no control over the fucktards in the stock market, and they probably have more influence over our economic wellbeing. What kind of sane economic system would let sociopaths and simpering morons even near the levers of economic power?

      • by khallow (566160)

        We have no control over the fucktards in the stock market

        Sure, we do. Stop giving them money. If they really are losing money, then the problems will stop when they run out and can't trade anymore.

        The markets have automatic correcting mechanisms for stupidity. Let's use them.

  • I am shocked, shocked!
  • #idiots (Score:4, Insightful)

    by quonsar (61695) on Friday October 11, 2013 @06:48PM (#45105809) Homepage
    lightning: electrical discharges in the atmosphere.
    lightening: what happens just before dawn.
  • by Anonymous Coward

    "... the Soviet Union is no more .."

    The tweet mentioned "Soviet Weapons" which are still around, not the "Soviet Union". Don't tweet words into their mouth.

    I even bet oil traders have even looked at the entire #hashtag before screaming down the wire... #fearrules

    • by styrotech (136124)

      Not just putting words in mouths but also completely reversing stuff. The slashdot summary said:

      But the tweet referenced the bombing of Syrian airports by Soviets

      when the actual tweet said:

      Israel Air Force bombards airports in Syria to prevent Soviet weapons reaching the Syrian Army

      Which is a completely different thing. There I was thinking "I never knew the Soviets bombed anything in that war" and "why the hell would they be bombing the Syrians?".

  • They don't realize when something is ridiculous

    And that is why having a worldwide integrated financial system mostly cobbled together with automated scripts is not always such a great idea.

  • has become "someone tweeted wrong".

  • what a massive "jump"!

  • This is just terrible reporting. 1) No support is given to the claim that it was really the tweet that caused the "spike"*. 2) No account is given on how exactly the supposed misinterpretation came to be. Sorry Reuters, but writing that "traders did it" just isn't good enough. If this is a real "trading" story, there must be an official account of it happening somewhere (like an Exchange memo or something), and if there is, you should fucking dig for it and show us. *3) No context is given explaining why
  • There's how smart investment day traders think they are and then there's how smart they really are.
  • by Azaril (1046456) on Saturday October 12, 2013 @05:27AM (#45107585) Homepage
    I'm not sure where this came from. Speaking as an oil trader, the spike was entirely the result of Boehner's speech offering a temporary debt increase. I do have several twitter feeds open to guage news sentiment, but the IDF's isnt one of them. Did the Israelis find a ton of oil i was otherwise unaware of?
  • by cascadingstylesheet (140919) on Saturday October 12, 2013 @06:30AM (#45107717)
    ... I'm still shocked when anybody does anything based on something that happens on Twitter.
  • And this is yet another good example of how fubarred the stockmarket is today. it's really time to reform the tradingmarket so stuff like this can't happen.. the whole financial crisis is more due to the media and it's reporting than on real financial information...
  • the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared

    I'm pretty ignorant about the global oil market. Does 1% really qualify as a jump?

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