Crude oil mysteriously plummeted more than $3 in just one minute on heavy volume Monday afternoon, leaving energy traders and regulators scratching their heads about the potential cause.
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While some speculated about a possible trading glitch, others pointed to overbought energy prices and rumors swirling around the financial markets that the Obama Administration is deploying the Strategic Petroleum Reserve to ease prices.
The Commodities Futures Trading Commission is "looking into" the trades behind the oil price plunge and is in contact with the CME Group (CME) and the Intercontinental Exchange (ICE), Reuters reported.
The CME Group acknowledged in an emailed statement that energy contracts "saw a coordinated selloff of a prolonged duration of 30 minutes," but "there were no technical issues and our CME Group markets performed as designed."
The Intercontinental Exchange (ICE) declined to comment to Reuters about the selloff.
The steep slide occurred at about 1:54 p.m. ET when crude tumbled from $98.18 a barrel to as low as $95.14.
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Brent crude oil also plunged in afternoon trading, suffering a $5 dive at one point.
“Unfortunately I am just as clueless as you are,” Cindy Wexler, an energy trader on the floor of the New York Mercantile Exchange, told FOX Business.
Some traders told FOX Business that rumors about a potential SPR release may have started the downward move, which was then exacerbated by a lack of liquidity caused by the Rosh Hashanah holiday.
"As we have made clear, all options remain on the table, but we have nothing to announce at this time," a White House official said in reaction to the market rumors. The comments mirrored previous ones from the administration on the controversial topic.
Darin Newsom, a senior commodities analyst at DTN, said he believes the energy markets were simply overbought, especially after a run-up last week triggered by anti-American violence in the Middle East.
"I think this had more to do with everyone rushing for the door at the same time, trying to get out of positions they were holding for a while now," said Newsom. "Funds were liquidating as quickly as possible today. It shows how heavily one-sided we can be in these markets."
After the selloff, crude settled at $96.62 a barrel, down $2.38, or 2.4%, on the day. It marked crude's steepest decline since July 23.
It was also the first loss in three days for crude, which has soared 24% since hitting a 2012 low of $77.69 in late June. Crude has gained just 0.16% in September and is down 2.24% on the year.