Several hours before the US stock market opened on Monday, the commodity world was shaken by an unexpected surge in crude options trades, with traders noting that “someone is either moving positions, blown up or getting out of commodities. MASSIVE amount of blocks going through in crude options.”

Someone is either moving positions, blown up or getting out of commodities. MASSIVE amount of blocks going through in #crude #options.#OOTT

— Mark Scullion (@mscullion) July 24, 2017

A Bloomberg alert shortly after confirmed the huge size of trades crossing the tape, when nearly $100 million in oil options traded simultaneously:

WTI crude oil options traded the equivalent of 48m bbl of contracts via block, according to data compiled by Bloomberg.

• Total value of all options combined is ~$99m
• Options include contracts from September 2017 through December 2020
• 5 largest blocks were: 4.4k Dec. $90 calls, 2.8k Dec. $60 calls, 2.5k Dec. $125 calls, 1.7k Dec. $95 calls, 1.4k Dec. $46 calls
• Click here for Excel detailing the value of each trade
• Trades all took place at 9:35am London time
• Contracts also traded with 9.6k lots of futures
• Similar trades also occurred on Brent in smaller volumes ~10:35am London time

As it turns out later, it wasn’t a fund liquidating, but Barclays selling the last part of its legacy oil book to an unidentified buyer, that triggered the surge in trading of exotic options most of which were written in the era of higher crude prices, Bloomberg reported this afternoon.

The size of the trade, which set traders on alert earlier, represented some 48 million barrels of contracts which “represents more than a quarter of the entire volume on an average trading day.”

Barclays (BCS) announced that it was exiting its energy trading business altogether last December – which until that point had been housed in its macro-trading unit – when the British bank joined an exodus that analysts then said raised concern among oil producers that falling liquidity means they cannot use derivatives for their basic function: to hedge risk by locking in future prices. As Reuters reported at the time, the departure of Barclays exacerbated the scarcity of counterparties for trade when producers are trying to hedge their production for 2018 and beyond, potentially raising the cost to lock in that output. That increase, analysts speculated, could force some cash-strapped producers to forgo protection altogether, putting them at risk if the market takes another leg down.