Crude is having a swift fall from yearly highs. Investors looking for the reason are pointing to China owned commodity derivative contracts, currently deeply out of the money.
It was China's buying of commodities that led crude to its yearly highs. Rumours are now circulating that several state owned China entities may walk away from hedging bets put on prior to the collapse of the world wide economy.
The total amount of derivative contracts at jeopardy is not known, but counter parties at risk advise the dollar amount is substantial.
If the rumours turn out to be true, world banking will be in for another round of losses; crude and the refined products will continue to sink.
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