The U.S. Energy Information Administration, responding to concern natural gas speculators jumped the gun on market-moving data yesterday, said today that it monitors its data releases closely to ensure the information is distributed fairly.
The statement from the EIA comes after analysis company Nanex LLC released a series of charts showing a spike in volume yesterday for an exchange-traded fund that tracks gas futures. The activity occurred before the EIA’s weekly report on inventories of the fuel was released at 10:30 a.m. in Washington, suggesting the data was leaked, Nanex said.
“EIA is committed to providing fair access to the information disseminated through EIA’s website,” Jonathan Cogan, a spokesman for the Energy Information Administration in Washington, said in an e-mailed response to questions.
Computerized strategies in stocks and derivatives have come under scrutiny after a series of market structure breakdowns in past years. While yesterday’s moves occurred at speeds reachable only through automated software, the volatility isn’t proof that laws or regulations were broken, said Stephen Schork, president of Villanova, Pennsylvania consulting firm Schork Group Inc.
“Is this a leak or is it just itchy fingers by the algo traders?” said Schork, who said he observed a bigger swing in volume last week. “I’m more in the camp that this is just a lot of money being tossed around to try to influence the market.”
The EIA’s weekly natural gas storage report typically is published at the same time each Thursday on the agency’s website. The data, which shows how much U.S. gas stockpiles increased or decreased over the previous week, is closely watched by energy traders and can spark dramatic price moves.
Almost 400,000 shares of the U.S. Natural Gas Fund ETF changed hands between 10:29 and 10:30 a.m., when its price fell from a high of $18.73 to $18.46, a drop of 1.4 percent. The fund tracks gas futures traded on the New York Mercantile Exchange.
Volume in the UNG ETF was about 13,000 shares in the previous minute and ballooned to more than 1 million shares in the 60 seconds after the data was released.
Front-month natural gas futures fluctuated in the second before the EIA release, dropping as much as 4 cents to $3.286 per million British thermal units from $3.326. Prices then slid to a low of $3.243 after the report before closing 0.4 cent higher on the day at $3.339.
Analysts who say the activity before 10:30 a.m. doesn’t signal a data leak aren’t examining the charts closely enough, Eric Scott Hunsader, the founder of Nanex, said in a phone interview from Chicago.
“People who make those kinds of trades without any news usually aren’t around very long because they’ve lost money off a stupid trade,” Hunsader said. “This was a trade on many different exchanges, clearly trying to impact the market as quickly as possible.”
The Commodity Futures Trading Commission, which regulates futures and options markets, “regularly monitors trading activity on commodities,” Steven Adamske, a spokesman for the commission in Washington, said in an e-mail. Adamske declined to comment on whether the CFTC was investigating gas trading specifically.
Damon Leavell, a spokesman for CME Group Inc., which owns the New York Mercantile Exchange, declined to comment.