Shangai oil futures volume…WSJ

by Jim Colburn • Saturday, October 6, 2018

The Wall Street Journal’s “Daily Shot” shows volume of trading for the new Shanghai oil futures contract, here

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AQR’s Cliff Asness talks to Bloomberg…

by Jim Colburn • Saturday, October 6, 2018

And it’s a pretty good read:

https://www.bloomberg.com/news/features/2018-10-04/quant-investor-cliff-asness-hasn-t-smashed-his-screen-this-year-yet

 

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Options update…

by Jim Colburn • Thursday, October 4, 2018

A general summary of options trading over the past few days as prices have rallied could be this: call profit taking, with some rolling into higher strikes and put buying with implied vols about unchanged…  Volume has picked up, with around 280,000 trading (up, but not crazy or close to a record)…  Note in the CME’s most active strike tool pictured below that calls traded slightly more than puts, but puts open interest increased by more than calls… This has been the pattern over the past few sessions… This was one of the more anticipated rallies as traders have been buying out of the  4Q18 (Dec18) money calls for the past year… Now, we’ll see if the front month (Nov) put buyers can cash in….

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Cushing inventories are sharply lower than last year… EIA

by Jim Colburn • Thursday, October 4, 2018

Cushing inventories declined sharply from last year… Here is the EIA’s “This Week In Petroleum”:

”Crude oil inventories held at Cushing, Oklahoma, decreased by more than half since this time last year, recently falling to lows last reached in 2014. Logistical factors and strong demand for crude oil from both domestic refining and exports markets have contributed to the steep year-over-year decrease.”

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Global Supply Tightens… WSJ

by Jim Colburn • Tuesday, October 2, 2018

Christopher Alessi, WSJ, quotes Commerzbank analysts, here

””News that China is now also reducing its oil purchases from Iran presumably gave the final push. This is likely to see Iranian oil exports fall by 1.5 to 2 million barrels per day,” the analysts wrote in a daily note Tuesday.

Buyers of Iranian crude, including China and India, have been reducing their imports ahead of the implementation of U.S. sanctions on the Islamic Republic’s oil industry at the start of November.

Officials at the state-run National Iranian Oil Co. have said they provisionally expect crude shipments to have dropped to about 1.5 million barrels a day in September, compared with 2.3 million barrels a day in June, according to people familiar with the matter.”

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Hedge funds add to length in energy markets… Kemp

by Jim Colburn • Monday, October 1, 2018

John Kemp’s weekly summary of the CFTC Committment of Traders report, here, shows hedge funds adding length… The “as of” date is the 25th, so the chart does not include more recent action… (presumably, more length was added)… Here is Kemp:

”Hedge fund managers are increasingly betting Saudi Arabia and its allies cannot or will not replace all the crude lost from the market when U.S. sanctions on Iran go into effect fully from November.

Hedge funds and other money managers increased their combined net long position in the six major petroleum contracts by another 50 million barrels in the week to Sept. 25.”

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US natural gas exports double… EIA

by Jim Colburn • Monday, October 1, 2018

From the EIA’s “Today in Energy”:

“U.S. natural gas exports have increased primarily with the addition of new liquefied natural gas (LNG) export facilities in the Lower 48 states. U.S. exports of LNG through the first half of 2018 rose 58% compared with the same period in 2017, averaging 2.72 Bcf/d.”

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Talk of $100 oil… WSJ

by Jim Colburn • Monday, October 1, 2018

Amrith Ramkumar, WSJ, discusses the possibility of oil going to $100, here

The best comment of the piece:

”“I don’t think anybody can anticipate how this all plays out in the next two months,” said Barclays’ Mr. Cohen.””

Here is a chart showing recent and expected supply/demand balances (deficits now, surpluses next year) from the IEA and Barclays:

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Some WTI options notes…

by Jim Colburn • Sunday, September 30, 2018

After Friday’s sharp price move to $73.25, we looked at options activity for any clues to what the market might be looking at away from the current price… In our podcasts and other comments on this blog, we have pointed out that the market has been trading strikes way above current prices including $100 (we assume that these are mostly initiated by buyers)… Here is the CME’s Most Active Strike tool which now shows 3 strikes in the top 20 for open interest that are $100!  These have been accumulating over the past year..

A look at a price chart from barchart.com shows us a crude market that has been in a range but recently (post-OPEC meeting) has rallied sharply:

And, here is the CME again, showing just Friday’s options action based on top change in open interest… Note that around 200,000 traded, pretty much evenly between puts and calls… But net change in open interest was much greater for puts, 39,000, than calls, 17,000…  So, a sharp move higher in price, after a week of rallying gives us a day in which put open interest goes up more than calls… Could mean nothing, but we’ll see…

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Iranian oil production and exports… Reuters

by Jim Colburn • Friday, September 28, 2018

Sumita Layek, Reuters, discusses oil price projections here… Included in the article is an excellent chart showing Iranian oil production and exports:

 

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