Violence is erupting all over the Middle East. The U.S. government said that it will not make a release from the Strategic Petroleum Reserve. So why isn’t Crude skyward bound? If you ask some, it may high-frequency trading (HFT) hijinx crossing over into the realm of commodities. Jeff Macke writes:

Kilburg thinks memories of capricious SPR releases from the past coupled with distortions from high frequency trading activities were behind the nearly $5 drop in WTI in the closing minutes of Monday’s trading session. He speculates that one headline-trolling HFT program found an SPR headline and flooded the market with bearish contracts.

“Once one algo goes, all of them go,” Kilburg notes with a shrug.

So, you’re telling us that these HFT algos, which are supposed to be smarter than the average bear, are scanning headlines – headlines that are frequently little more than rumor – and turning around to flood the market? Sounds like some highly intelligent trading right there. Investigations have been launched into yesterday’s sharp drop, though Crude is still headed downward today. The larger question is, should the investigation indicate that a rogue algorithm is to blame for the price movement, will commodity markets take a harder stance against HFT than their stock counterparts, or will it be the same show on a different day?