Nymex Oil Volume Drops to Six-Month Low on MF Global Limits

Oil futures volume fell yesterday to the lowest level in six months as the New York Mercantile Exchange limited trading by MF Global Holdings Ltd. (MF) after the firm filed for bankruptcy protection.

Futures volume fell to 381,435 contracts, the smallest amount since April 29. The number of contracts traded was 45 percent below the three-month daily average.

MF Global filed the eighth-largest U.S. bankruptcy yesterday after disclosing a $6.3 billion wager on European sovereign debt. CME Group Inc. (CME), owner of the Nymex, restricted all trading for customers of MF Global to liquidation only. The exchange also said it will no longer recognize MF Global as a guarantor for purposes of floor-trading privileges.

The low volume “absolutely was related to MF Global,” said Fred Rigolini, vice president of Paramount Options Inc. in New York. “MF Global has a huge percentage of trading accounts, from hedgers to funds to traders and those accounts were all frozen. Many traders were doing paperwork all day to transfer to other clearinghouses and it had a big impact on volume.”

Traders and brokers guaranteed by MF Global may not access the trading floors, CME said yesterday in a statement. MF Global was also suspended as a clearing member of the exchange.

U.S. regulators are investigating whether hundreds of millions of dollars are missing from client accounts at MF Global, according to two people with knowledge of the matter.

Crude oil for December delivery declined $1, or 1.1 percent, to settle $92.19 a barrel on the Nymex. Electronic trading volume was 601,306 contracts at 4:29 p.m. in New York.

-- Editors: Margot Habiby, Dan Stets

To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net; Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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