One day after stunningly bullish crude oil draw oil seems to be suffering from the QE blues. In the aftermath of the Fed minutes traders were disappointed that the Fed seems more split on another round of QE easing. Many believed that the printing presses were being filled with ink getting ready to roll but the rising concerns over the wisdom of that policy in the here and now seemed to suggest that the odds of a quick printing fix is less likely as opposed to more likely.
Forget the fact that the Energy Information Agency weekly petroleum status report showed a draw of 4.7 million barrels. After the Fed minutes that was old news. Perhaps the fact that we saw a much larger than expected build in products may have come into play at some point despite a splash of refinery issues may have influenced price as well. The EIA showed that total motor gasoline inventories increased by 2.8 million barrels last week and distillate fuel inventories increased by 3.1 million barrels last week. Total commercial petroleum inventories increased by 3.0 million barrels last week. Yet at the end of the day The Fed minutes seemed to influence most markets.
At the same time Brent crude is back below $100 a barrel as the Norway strike was averted and a sense that geo-political risk has been lowered just a bit because of the lack of proactive headlines. There is alo the sense that Europe's economy will continue to contract and without the Fed and their magical printing press demand for Brent crude is bound to fall. Not even a surprise rate cut from South Korea seems to be enough to rekindle rate cuts.
To all the clients of PFGBest, I will do my best to keep you informed of developments surrounding the bankruptcy. Today's Wall Street Journal wrote Futures-brokerage firm Peregrine Financial Group Inc., or PFGBest, filed to liquidate under Chapter 7 of the U.S. bankruptcy code on Tuesday, leaving customers wondering about the fate of their funds. Although customers may get a quick return of some assets, the liquidation process can be confusing and lengthy. Here are answers to some questions about customers' money.
Q: How much money is missing?
Any money the trustee determines is still in segregated accounts-accounts specifically designed to hold customers' funds-can be distributed quickly, potentially in just a few days, said bankruptcy experts.
In a futures-brokerage bankruptcy, a trustee is appointed to return segregated customer funds. The trustee also collects and liquidates company assets and distributes the proceeds, subject to court approval.
Q: Are there any other resources for customers?
CME Group said Wednesday that family farmers and ranchers with assets caught up in the brokerage's collapse will be eligible to draw upon the exchange operator's new insurance fund. The fund provides up to $25,000 per account to customers that suffer losses from the insolvency of a futures brokerage.
Q: What about open positions in futures and options that haven't been settled?
When commodity brokers fail, open trading positions are often transferred to other brokerages. But in this case, those positions have already been liquidated by Jefferies Group Inc., JEF +1.69% which served as PFGBest's clearinghouse. Jefferies on Wednesday said PFGBest-related cash of roughly $125 million will remain in fully segregated accounts until disbursement is directed by regulators.
Q: What do the company's assets and liabilities mean for customers?
PFGBest said in its bankruptcy filing that its assets are between $500 million and $1 billion, and its liabilities are between $100 million to $500 million. If assets are in fact greater than liabilities, brokerage customers may have access to those assets before other creditors, bankruptcy experts say.
A bankruptcy judge would approve distribution of assets outside of segregated funds. Depending on the complexity of the case, that distribution could take months or even years, experts say. A criminal investigation, under way in this situation, could also delay any distributions.
A: MF Global Holdings Ltd.'s MFGLQ 0.00% collapse in October resulted in a shortfall of roughly $1.6 billion in customer funds. Nine months later, customers have received about 80% of their U.S.-based funds as trustee James Giddens searches for more assets. Since PFGBest is a much smaller firm and believed to be less complex, it is possible that the bankruptcy case could proceed more quickly, experts say, but the timeline isn't known.
Regulators are currently trying to locate customer funds, which stood at over $400 million as of April, according to data compiled by the Commodity Futures Trading Commission.
A meeting of creditors is scheduled for Sept. 5, 2012, at the office of the U.S. Trustee in Chicago. Trustees in bankruptcy cases will typically distribute contact details and a website to direct customers and creditors but that hasn't happened yet
If you have any other questions please contact me at the Price Group at 888-264-5665 or email me at email@example.com