LONDON/NEW YORK (Reuters) - Barclays Plc (L:BARC) was liquidating its remaining U.S. crude options positions early on Monday, according to two market sources, causing volumes to spike as the British bank closes down its energy business.
The investment bank was seen selling all or part of its oil book, causing a surge in volumes in the U.S. crude options market early in the trading session, the sources said. They requested anonymity because details of the trades were confidential.
Barclays planned to close its energy business within its 'Macro' trading division, it said in an internal memo late last year, to focus more on interest rates and foreign exchange businesses.
The trades occurred in blocks at the same time, with some of the largest transactions in December $90 calls
A spokesman for Barclays declined to comment.
The company's energy business includes the sale and trading of energy-related products, largely derivatives such as oil futures and options contracts, within the 'Macro' division that also trades foreign exchange and interest rate products.
Since the 2008 financial crisis, Wall Street firms have scaled back in commodity markets, cutting back on owning physical assets or taking positions, as regulatory scrutiny has intensified. Banks had been big players in the market for derivatives in forward months.
The departure of Barclays raised concerns about liquidity when producers try to hedge their production for 2018 and beyond, potentially raising the cost to lock in that output, market participants have said.
Bloomberg first reported on Monday that Barclays sold the last part of the oil book, triggering a surge in trading, citing people familiar with the matter. (https://bloom.bg/2eIrewk)