JPMorgan's commodities risk down from year ago

NEW YORK, July 17 (Reuters) - A measure of JPMorgan Chase & Co's (JPM.N) commodities trading risk fell 23 percent in the second quarter from the same quarter last year, implying that the investment bank is being cautious in ramping up its commodities trading business.

The No. 3 U.S. bank said in its latest earnings report on Thursday that the average daily trading value-at-risk for commodities stood at $31 million for the three months ended June 30, meaning that the bank's maximum losses on 99 percent of trading days was $31 million, down from $40 million in the same quarter last year.

JPMorgan is planning to start trading in physical crude oil later this year, but could be moving more cautiously after recent record fluctuations in oil prices, analysts said.

"When you look at your at-risk calculations, one of the fundamental applications in it is often your assumed volatility," said Rick Meckler, analyst at Libertyview Capital Management.

JPMorgan's commodities chief, Blythe Masters, told Reuters in an interview in May that the bank will start trading in physical oil and refined products by the end of the year after its takeover of failed rival Bear Stearns and that firm's energy trading unit, Bear Energy. [ID:nSP148501]

JPMorgan announced a 50 percent drop in second-quarter profit on Thursday due to mortgage writedowns, but did not comment about its commodities operations in a statement about the results. A spokesperson did not return a call seeking comment. (Reporting by Barani Krishnan; additional reporting by Dan Wilchins; editing by Jim Marshall)