– John Kemp is a Reuters market analyst. The views expressed are his own –

By John Kemp

LONDON, May 25 (Reuters) – The standard analysis of speculators’ positions in crude oil markets is highly misleading. By focusing only on futures and options positions in physically-settled NYMEX light sweet oil it ignores important and financially equivalent positions in other WTI-linked derivatives as well as positions on the rival ICE market in London.

The anomaly has been thrown into stark relief by proposals published by the Commodity Futures Trading Commission (CFTC) earlier this year that would start applying position limits for referenced energy contracts on an aggregated basis across similar commodities.

In addition to the four referenced contracts (NYMEX crude, gasoline, heating oil and natural gas) aggregate limits would apply to any other contract exclusively or partially based on the same commodities and deliverable at the same location (75 Fed Reg pages 4144-4172).

While other aspects of the plan have attracted fierce criticism, most accept the logic of applying some form of aggregation when trading is split across different but financially equivalent contracts.