Oil Trading

The Gambit details the murky but exciting world of oil trading, i.e. the buying and selling of crude oil in various forms and markets, as part of the overall plot. This is done in an entertaining and educational manner, concisely as possible, not as a complex treatise on the subject. Of interest is the "trading pool" established by the conspiracy of a handful of individuals, intent on wrecking oil markets by engineering terrorist events aimed at critical pressure points of the global petroleum sector. These events are designed to spike oil prices. The conspiracy is not interested in political or strategic goals only; they actually want to make a buck in the process as well. The latter is accomplished by loading up on a significant crude oil trading position in advance of any attacks perpetrated. The ensuing runup in oil prices will enrich the shadowy members of the scheming group.

The trading pool is the means whereby the conspirators contribute their respective shares of funding required to finance both the attacks and the massive speculative position achieved (one hundred million barrels of crude oil) and the same means for distribution of eventual profits back to the participants. Through a means of leveraging the purchase of the trading position, as detailed in The Gambit, the members of the conspiracy are only responsible for a small portion of the capital required, the rest being financed through bank or trade credit, margin, etc. But, they reap all the upside in trading gains. That upside proves to be over one billion dollars in trading profits.

Over time, however, the trading pool participants keep dying off. What's going on there? Does one party want all the gains accrued?

The speculative position developed is explained in some detail: how it is built using various components, the use of financial leverage, the financing of the position, and the means to avoid market and regulatory detection. Also described is the means by which the position is wound down in the market after the occurrence of a terrorist attack, the use of mileposts along the way to meet certain trading benchmarks and so forth. The author of The Gambit, as a former oil trader for a major petroleum company, and still trading crude oil electronically for his own account, explains the foregoing in a conversational manner designed to interest the reader.

Along the way, numerous explanations are provided in a casual manner explaining oil futures contracts, the exchanges on which they trade, and various other terms are introduced as commonplace in oil trading. This is intended to equip the reader to pick up the jargon and feel for oil trading.

Somewhat amusingly, two additional characters are introduced in The Gambit to capture the flavor of oil trading at a personal level. These are Barton and Eppler, two scheming oil traders privy to the conspiracy and who desperately try to personally profit from the venture. Note that the two are not anxious to alert regulatory officials in the process; they are more interested in profiting from the action underway. To achieve this, and avoid detection, they enlist the services of a New York hedge fund as part of the process. The pair unwittingly falls into an elaborate trap set for them by the Lebanese banker, Antoun, a member of the conspiracy, and the highs and lows experienced by them from the ensuing oil price fluctuations are well chronicled. This gives the reader a personal view of oil trading, the mental processes required and the greed/panic which might result.

Oil trading is important to global commerce. Every day, 85 million barrels of crude oil and its derivatives are priced on the planet and those prices fluctuate throughout the day. The price of oil seeps into every corner of global activity and into a vast array of products consumed in daily life. How oil prices are determined, manipulated, or otherwise influenced is critical.

By the time the reader puts down the novel, hopefully he or she will understand the world of oil better and gain an appreciation for the skill, greed, cynicism, politics, etc., i.e. the humanity, of its players. When readers hear the term "oil futures" or commentary on the price of oil from various media available, perhaps they will think of The Gambit.

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