Oil prices plunged more than $5 in a few minutes on Monday afternoon as volumes spiked in a rapid selloff, sending Brent crude crashing through technical support as markets sought an explanation for the plunge.
Brent sank from $115.20 a barrel at 1:52 p.m. EDT to $111.60 three minutes later as trading volumes - which had been muted by the Rosh Hashanah holiday - shot up.
Ten thousand lots traded in one minute during the drop, up from 152 lots the minute before prices plummeted. Brent crashed through the 200-day moving average before beginning to recover.
U.S. crude also dropped, but not as deeply as Brent.
It was not immediately clear what caused the crash, but traders said it could have resulted from a problem with a computer trading program.
The market has also been watching for any move to release crude oil from the U.S. Strategic Petroleum Reserve, which government officials have said was an option to ease the pain of high oil prices on consumers.
"I've been doing this for 14 years and that's the fastest move I've ever seen," said John Gretzinger, energy risk manager at INTL-FCStone in Kansas City.
"I think it was too fast to be anything but HFT (high-frequency trading) or other algos. We just don't know right now, but that's my gut feeling."
By 2:38 p.m. EDT, Brent November crude was trading down $3.40 at $113.26 a barrel.
U.S. October crude, set to expire on Thursday, fell $2.38 to settle at $96.62 a barrel.
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