Commodity Research Group (CRG) is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct hedging strategies.
In this podcast, oil market experts Andrew Lebow and Jim Colburn discuss key fundamental forces driving oil prices in both the futures and options markets.
About Your Hosts
Andrew Lebow has been involved in the energy derivative area since 1980. He began his career with Shearson Lehman Brothers where he worked in the initial formulation and marketing of the NYMEX WTI crude contract in 1983 as well as the NYMEX gasoline contract in 1985.
Mr. Lebow has appeared before the State Government of Alaska as well as the State Department of Defense to discuss hedging techniques. Mr. Lebow is also well known as a market analyst and is quoted frequently in the financial press. He has appeared on television on CNBC, NBC, CNN, CBS, and PBS. Mr. Lebow holds a BA from Lafayette College and an MBA from the Kellogg School of Management at Northwestern University
Jim Colburn is a futures and options professional with 30 years of wide ranging experience in commodity markets. For much of his career, at Man Financial (1989-2011) and Jefferies LLC (2012-2013), Mr. Colburn worked with major integrated oil companies, hedge funds, pension funds and other entities to develop market hedging and trading strategies.
He has conducted trading, hedging and risk management workshops in energy markets worldwide.
Mr. Colburn is a published author on options trading, hedging, market making and risk management. In 1986, while at the New York Mercantile Exchange, Mr. Colburn helped develop new markets in energy option contracts by educating the oil industry, banks, floor traders and brokers, worldwide.
This is Jim Colburn of Commodity Research Group. I’m with Andy Lebow also of Commodity Research Group and we’re here with another edition of Energy Markets.
To learn more about us, you can check out our website, www.commodityresearchgroup.com where we post our podcasts and blog.
We would like to thank our friends at EKT Interactive Oil and Gas Training for hosting this podcast. Check out their newsletters, podcasts, and learning modules at www.ektinteractive.com
This podcast should be construed as market commentary, merely observing economic, political, and market conditions and is not intended to refer to or endorse any particular trading system, strategy or recommendation. We are not responsible for trading decisions taken by anyone. Information is not guaranteed to be accurate. This is not an offer to buy or sell any derivative.
Today is January 15th and Andy, this is the first podcast of the year.
Good morning. And I thought, uh, once again, we had a lot of moving parts, but I thought I would just do a quick summary of 2019 from an option volatility perspective and that’ll lead us right into, uh, today’s, you know, focus on geopolitical events.
So with that, I just want to say w when we came into 2019, we hit, didn’t note at the time, but we hit the high volatility of the year at 53. And that was because we were coming off a really a bear market. We made a lo of Decem at December 24th trading in the forties. And we had come down from, uh, in the 70s from October. And, uh, we bottomed and then start rallying up from there. The low vow was made on April 5th at 22.2. It’s a, you know, that’s a huge move. And then September was the another, the next big Val move was a Saudi, uh, the bombing of the Saudi oil fields. And we got up to 46.4. And I thought that was interesting because we couldn’t, you would think anytime there was a bombing of a Saudi oil installation that would be the high vol of the year, maybe of the decade.
Uh, but it wasn’t. And uh, we traded lower from there, volatility wise and um, the, we are now the, we got down to like 22% in December during the holidays. And then of course with the killing of, uh, general Suliman and then the price, we had a $66 50 cent range in early January where the Deval moved up to 29.4. So part of it obviously is, is the taking out of the general and part of it was the Iraqi response, but we got up to 29.4 below the longterm average, which is around 32, seven, five volatility. So it wasn’t a huge Vall offense. And, um, we’re around 26% now. So that kinda leads us into the geopolitical issues. Still driving this market. Maybe short term, but they’re still hanging in the background. Why don’t we, why don’t we start out with comments on, uh, ran and their response? And what do you think, uh, we do going forward?
Well, Iranian production has obviously come off very sharply from a pre sanctions to post sanctions. They were producing it around 3.3 pre sanctions and they’re now at 2.0 2 million barrels a day post sanctions. Now the Trump administration had tried to get them to zero. They’ve done a good job, um, in, in terms of crude because crude has come down to about 200,000 barrels a day of exports from, uh, something like one, two to one five. Uh, but there’s still, uh, ex ex reporting products. Product exports are, um, probably like three to 400,000 barrels a day, which is maybe even higher than that, which is helping to, to a certain extent, fund the regime. Now, you know, they’ve, obviously they’re having, because their crude exports are down so hard, they’re ha they’re having some severe economic problems, which, um, may or may not, uh, allow them any type of, uh, serious retaliation against the U S for the, the killing of, uh, of Solemani clearly, uh, the most important retaliation that they could take would be to close the straits of Hormuz, which would probably block something like, let’s say, 17 million barrels a day of crude through, through the straits.
I, I don’t think that, uh, they, they really have the wherewithal to do that right now. Six would really have to escalate seriously, uh, for the straits to be closed. Could they attack, uh, oil infrastructure? Yeah. I mean, they just did it and, uh, they, they may try that again, but again, whether or not the, that they have, have the, uh, the wherewithal to do that right now, particularly with, with the regime under pressure, uh, for the Downing of the, um, yet, you know, I, I, I’m not sure w w where they’re going to go with that. I mean, could there be proxy attacks? Yeah, there certainly could be a proxy attacks, but in terms of actual loss of output or a loss of, uh, supply, uh, I don’t, I don’t think we’re going to see it’s a serious loss of supply, Jim.
So, um, but, but you’re not say, I mean what I hear what you’re saying is you don’t don’t sell out of the money calls, right?
Don’t sell out of them. No, of course. Yeah. Yeah.
Do you think there’s a possibility that, um, what’s going on with Iran with, um, you know, the protests internally, Lebanon even, uh, even Iraq, the, uh, some of the, uh, Iranian, uh, uh, what, I guess the Shiites are also, uh, protesting in Iraq and, and um, do you think that would move them closer to maybe an agreement with the Europe or the U S uh, going forward? It’s a, it’s an election year for Trump. It would be, uh, something that, which I start to say what he really wants. And, um, do you think as a possibility of, uh, talks and moving towards an agreement maybe led by a French?
You mean the, that Macron proposal? Yeah, I mean this is a chance for that. I don’t, I’m not, I don’t think you, it’s hard to be optimistic that, that, that could happen. But the, there’s certainly a chance and you know, let’s not forget that that’s a million barrels a day of a Iranian crude that could come on, on the market or, uh, I know the deal was maybe a half million barrels a day, uh, to come on right away. But I don’t, I don’t think that’s going to happen, Jim. I really don’t think that’s going to happen. But having said that, that that is more, that is a downside risk to the market because we’re, we’re, you know, there is that, there’s certainly is that added supply plus, you know, they’ve been building up storage cause their production is way more than what their, uh, exports or internal demand would be for a crude. Hence, you know, the exports are fine products, but nevertheless, you know, that they’re, they’ve got storage. So if there was some kind of agreement, it could come onto the market right away very quickly.
Okay. Um, moving, you know, OPEC came out with their oil, a monthly oil report and, um, they showed production at 29.4, four in December. Now that’s a S from secondary sources. What going forward, what, where do you see their production and let’s, let’s talk about the, uh, call on their oil in that report.
Yeah. This is the, this is the, yeah. This, this is the main thing, right? Uh, you know, the main fundamental for the, for the market is, uh, you know what they’re, what the call on OPEC crew, which is derived from what is expected global, you know, non-OPEC supply, less demand that come up with the, the one, you know, one number that you can focus on that can quickly say, all right, we had surplus or deficit. Yes. Trying to simplify things. Annie, there’s a lot of moving parts in this far. It’s a lot of moving parts, but let, let’s get down to, let’s distill like the main, the main number and, uh, as he said, the OPEC production is, um, 20, 29.44. It looks as though, you know, we, we like to take the um, EIA, uh, the IEA and OPEC numbers and kind of put them together and get a, you know, a sense of a sense of what the, the, the average of the three of them are.
Cause they, they tend to be, they’re not, they don’t tend to be all that close all the time. But it looks as though if you did that the first half of the year, the call on OPEC crude would be something like 28.7 million barrels a day. Just take, you know, just taking the average. So if OPEX producing 29 for that, then we have a surplus of 0.7. I think it’s going to be closer though. I think the actual call is going to be a little bit higher and I think OPEC production is going to be a little bit lower. But still it’s a surplus. And what we’re looking at is probably, you know, four to 500,000 barrel a day surplus on the market for the, for the, uh, for the first half of the year. You look at the second half of the year and again going through the same analysis, that call goes up to buy a million barrels a day to like 29.8. So if OPEC was producing 29 to, you know, then you have a deficit of a half a million barrels a day. But as you said, Jim is a lot of moving parts on those numbers. Yeah. So let’s, uh, let’s look at some of those was um, the, the, the uh, we talked to people who model, uh, consumption and many of them say it’s basically GDP plus weather, I guess. Uh, there’s been some revisions in GDP. I think the EIA is leaving their, um, their estimate on change, but I think OPEC may have bumped their, this is demand world demand for next year may have bumped it up a little bits that I see a numbers like a, 1,000,003, 1,000,002, and we get the, um, we get the [inaudible] tomorrow. Um, what do you think of those? You think that those are good numbers?
Yeah, I think, I actually think one two is probably right. Um, it looked like 2019 will come in around the million, you know, give or take 100,000. We lost a lot of demand on the, on the uh, on manufacturer and you know, and some weather factors. Gasoline was, was disappointing this year as, as was diesel was, was pretty. This was very disappointing. And we’ll talk about U S demand. Um, and I guess we’ll talk about IMO 2020, but I think one, one, two, yeah, one, two, one, three. Yeah, I think that’s possible. Presumably this is going to be, uh, you know, maybe trade picks up some, you know, with the signing of the, of the, uh, this phase one deal maybe is that, um, is that the usual suspects? India, China, rest of world. And then O C D is pretty much flat. Oh, UC Davis. It was probably downloads, you know, may have you probably down last year.
And uh, China, India sorta had a, didn’t have a great year. China had a good year on the petroleum demand. Um, certainly their, their important numbers were just like rip roaring in the, in the fourth quarter. Some of that probably went into storage, but some of that went into their new refinery capacity. They have 800,000 barrels a day of, uh, new refinery capacity. And that then that, you know, is coming out as, um, diesel, you know, they’re, they’re diesel monsters. So you know, that that’s sort of soft soften the refinery. Margins in Asia are not, are not good at all. And, um, despite the, you know, despite the higher demand and you know, that that may be a, um, that may be part and parcel of, uh, some of the new refinery capacity. Well, that’s, that was going to be one of my questions is we’re, we’re seeing another million barrel plus plus million of demand that we have.
We have the refining capacity and uh, your answer is by, yes, we do. Yeah. Yeah. This is going to be a surplus or for finery capacity probably coming up here in the next, uh, you know, next couple of years. I think the, you know, chip, they always talk about the golden age finery is over, over five products and every few years there’s a golden age. You know, it looks like this, this last golden age is, uh, coming to an end, or if the fidelity, uh, has it because, you know, margins right now, it’s early in the year, margins are, uh, you know, nothing, nothing to write home about in either the U S or, uh, certainly in, uh, certainly in Asia, despite while I, emojis just kicked, you know, just kicked off. So the IMO 2020, so we’ll see what the effect is. The European margins are, are OK, not, not as, not bad.
So, um, I wanted to move back to, um, maybe do you want to cover us oil demand or you want to talk about non-OPEC supply first? Well, let’s talk about it since we’re going on, uh, since we’re still talking about these balances. Yeah, let’s talk about non-OPEC supply because it’s, it’s gonna be a, um, big story. It already is. A big story is we had added the fourth quarter and into the first half of, uh, 2020. You know, we’re, we’re seeing, we’ve already seen big gains in, uh, in Brazil thanks to the pre-salt is finally coming in, you know, and, and, uh, so we’re going to see a probably a five to 600,000 barrel a day grow. We’ve already seen it and it’s, uh, we’ll see some more as we head into 20, 20. Norway’s going to have a, a, a good year on, uh, on production with the startup already. The startup of their, um, yo hands fare up field and, uh, Guiana is going to have a really big year. You know, they’re going to go from zero to 120,000 barrels a day, uh, of, uh, offshore production this year, last year zero. Uh, and they’re saying that they think by 2025, they could be producing 750,000 barrels a day. You know, we’ll see. Well, you know, that’s, that’s a, uh, that’s a, we’ll see how they become a citizen. We’re ready. Right?
It’s about to be like Alaska. If they don’t mismanage their, uh, you know, that’s a resources. Well, we’ll go see. But nevertheless, you know, it’s part of a, uh, a growing pattern. And, uh, and then, uh, there’s North America, um, the U S you know, we’re, we’re looking to grow. The UIA just increased, surprisingly increased their view for, uh, for 2020 to I think 13.3 million barrels a day from like 13.2 million barrels a day, but significantly, you know the, there we’re, we’re at 13 now.
Yeah. The weekly number that came out this morning showed a production at 13 zero. Now those are the weeklies. They get revised, but still, that’s, that’s to me, that was just a, I mean, we were at 12, nine but I’m just saying 13 is who would funk it? It’s still, it’s still an amazing story.
Um, well it’s an amazing story, but you have to, those gains, we really saw a, I’m looking at the monthly productions right now. Production of us screwed. So in may we were at 12.13. Okay. And so December we’re at 12.9. So we really saw a huge boom in the second half of 2019 on, on us production. We’re not going to see that. I don’t think in, uh, in 2020 but that, that’s, that’s like a pipeline opened up or something. Right? Yeah. Looks like, yeah. Called the Permian. Just when, you know, is that a control in the, in the second half of, uh, of 2019. So w you know, we’ll see this, a lot of this, a lot of different views on, uh, on where U S production is going to come in. And, uh, in 2020 looking at our world gym, you know, you’d have to believe that on that rally in, uh, you know, in December and early January, there was a lot of hedge activity for a second half, 2020, and into Cal 2021. Yes. So maybe that brings, maybe that brings extra barrels out. Yeah, it’s hard. It’s hard to say. Um, the, the, um, you’re, you’re also dealing with the comparisons because like you said, we’re, we’re expecting the IAS looking for what, 13, three for the whole year, right. We’re at 13, even now. So you could say, well, that’s not a huge increase from where we are now, but if you do the year to year comparisons, because we say it’s like a, it’s like over a million.
Right, right. But yeah, but in a way that’s not the, you know, I don’t think you can look at it that way. No, no. You say, Oh, we’re up a million, but we already hit, you know, we already had a big yes, big boom, so we’re not up that much. But, you know, we’ll see. I actually looked, I went back and looked at what they were saying last January, the AIA. They totally missed it. I mean, there they were, they were looking for December production. It’d be like 12 three or 12 four. Yeah, it’s a number. And it came in that, you know, came mid at like 12 at 12 nine you know, you, you throw some engineers at an issue and they figure stuff out. It’s unbelievable. Yeah. Well they did. I remember, you know, they did, in fairness to them, you know, that they did into the first and second quarter begin to make some serious revisions. Right on there. Look for, for Q 19 plus, you know, it’s uh, these, these are, these are hard things to forecast, especially with when we’re talking about the future. Yeah.
You got that right. But let’s talk about just getting into non-OPEC. So I’ll pick for doctrine is supposed to grow, could grow as much as two and a half million barrels a day this year. Right. You know, this year is not really U S driven, right? Uh, it’s driven by, you know, it’s going to be by Brazil and what we had mentioned and also Russia. I was going to say this, you think this non OPEC production puts more pressure on this uh, OPEC pack? Yeah, yeah. I think, you know, they had to, they had to sharpen their pencils at the last meeting and come up with some, some additional cots. So, um, yeah, it, it definitely puts a lot, puts a lot of pressure on them. And that I think leads us squarely to, you know, what, what they’re, what they’re going to do. You know, what, what are the, what to do about it, right.
And squarely to the Russians. Because you know, the, this, this deal, the OPEC deal is through first quarter and we heard yesterday, I mean there was some talk about them not meeting in March, which I think would be smart not to meet in March because the, the, this, I think the Saudis and Russians are a, you know, have some different views and um, you know, the Russian 20 they want out, they want to start increasing production. They already got a pass on condensates and they’ll, they’ll be producing record condensates as we head into the second half of the year. And they want to increase crude production too. And they probably have another few hundred thousand barrels a day that they can crank out maybe as much as 400 a day. So you know, as they, as we head into June, they’re going to look at this call on OPEC crude.
And as you mentioned, Jim, their own, their own agency, OPEC has them at third at 30 million barrels a day call on OPEC crude for the second half of the year. Right? So here they are at 29 two and they say, okay, the call’s going to be 30 million barrels a day. What are we going to do? It’s coming from us, it’s going to come from us. You know, we’re going to get it. Yeah, we’re good. So we’re going to have to increase production. Yeah. And then the deal ends and then the Russians increased production and you know, is it a free for all? Is it a managed increase? You’ve got, you’ve got the neutral zone coming on. So you know this, this is a lot not to mention in the background and I know you hate this and yet you have the EVs, you know that they’re there. I’m not, I don’t think they’re at a critical mass, but the growth is impressive. And um, electric vehicles, um, my start, um, I’m sure it’s in the back of their minds that, you know, in the long run, fossil fuels, oil demand is going to flat. Now, you know, maybe go down and in the meantime we’ve got all this non OPEC stuff keeping us from producing our oil. Now it’s going to be worth less as we go in. Right. Though I would say my bottom line is I’m thinking there’s more pressure for them to produce more earlier than later.
You, you, yeah, you may be right. What they do have going for them, they have a few things going for them. One is depletion. I mean, that’s a great thing because for them at least, you know, we lose, uh, three to 4% of, um, of production every year of crude production every year on, uh, on depletion. So that, that, that’ll help them. The other thing is there aren’t that many new offshore projects on the, on the boards right now. I mean, Guiana. Yeah, I mean they’re, they’re talking a big game against that is that the costs are lower and you can probably get, you know, you can move quicker from the planning board to the project, but you know, what are those, what’s happening on those planning boards? Cause it isn’t only OPEC looking at, um, alternative, you know, alternatives and then EVs and, uh, renewables, you know, on the matress, they’re not, their heads aren’t in the sand.
And that, and they’ve got a, you know, and they’re the, the, the whole, um, ESG movement now is something that’s going to be pressuring these, uh, some of the majors. So I’m less capital available maybe. Right. Less capital available. Imagine if there’s a ban on plastic. Oh boy, that would be bad because plastic is fin, you know, that, that the, the um, you know, the, the HDLs and Fiddler, the one leading the really been a great demand leader know along with diesel, not last year. Speaking of diesel. Yes. Let’s, let’s just move on to this. Yes. Let’s move on to uh, the EIA numbers, which were unbelievably bearish. This weekly number just today, today’s week. There’s the monthly report came out yesterday and then the weekly’s come out. Came out this morning. Right? Go ahead. Yeah, so we’ve seen gasoline stocks build 16 million in two weeks. This Dillard build 11 million in total stocks building 30 million day supply where we’re ahead of everything except crude than crude.
Then build because of the exports. So those numbers are were ugly. Let me just, the two week numbers were really ugly. Some of that is end of year tax nonsense, but it’s not, it’s not a great way to be heading into a, into January. Now the good news is that February, the good news for products is that February we go into turnaround. So maybe things will tighten up on the product side. This lets the weather’s been, you know, we haven’t really had any, any serious cold weather here, so that’s not helping. And guests lien demands is basically plateaued. So, uh, we, we’ve got like three years in a row at nine three, I don’t, I don’t see a big growth on gasoline. As you mentioned, you know, EVs are going to start having an effect. Maybe not this year or next year, but you know, we move into mid decade, they’re going to start having a big effect. Yeah. There’s also the lifestyle changes. I mean, when I was my kid’s age, I was driving a lot more than they do and they don’t even have two kids. They don’t own, they don’t own cars. So there’s this, and I don’t drive as much as I used to. So there’s a whole lifestyle change, at least in the U S right, right. People are working from home. The people that work from home, um, you know, the, the fleet is certainly getting more, more efficient as, uh, some of the older cars are retired, but, uh, still we heard this number last night and it’s the number that I think I used in last, in last month’s podcast.
There are 1.2 billion internal combustion engines on the road and all is 7 million electric vehicles on the road. So, you know, it’s gonna take a decade at least to retire those, those internal combustion engines may be more. Yeah. And in fact, we’re not going to, because the projections are by 2030, this is going to be 2 billion internal combustion engines on the road and still only hundreds of thousands of electric vehicles. So this is a long way to go still. Yeah, that’s right. Just to, I just want to back off, you mentioned the warm weather. Um, our old friend, the March, April natural gas, uh, spreads, gone backward, dated, and that’s been, um, I guess, you know, there’s a lot of widowmakers around, you know, trades that, uh, you know, are, are, uh, sort of behave in a normal way until they don’t. And they, and they take a lot of lies in terms of, uh, traders, uh, blowing out.
And, um, I want to, if I had to call a widow maker in your world, it would be the heat to gas spread and is it, and that thing has gone, like you don’t, you say, well, you never sell heating oil in the winter time. You never sell gasoline during the gas season. Um, but even that is probably gone by the boards, I think. Yeah. That’s blown out. People on both sides as well. Yeah. And I, and in my world, the Widowmaker would be selling TV options, like selling deep out of the money options. Uh, because, uh, you know, the, the line we used to hear is a, I don’t know where the market’s going, but I know where it’s not going. And so they would sell those calls or those puts in a huge way and then, and then blow up. So, so I just want, I just wanted to mention the, uh, March, April natural gas spread has gone a little, little, uh, sorry. Did I say backwardated? Contango tango? Yeah. It’s always backwardated except when it’s not [inaudible] and just in a little bit, but it’s just a, it’s, it’s an amazing spread. If you go back and look at the history of that thing, well, it should’ve, I don’t think you wanted to be short the, uh, even though you felt pretty good about being short, the March 65 calls and WTI yeah. When it spiked to 65, 65 overnight, that was overnight.
Yeah. Yeah. That wasn’t a good feeling. Yes. No, especially, yes, that’s right. Um, can we, can we talk about the crude curve for a minute, Andy? We, we have the, uh, first S w we have this idea that we’re going to have a lots of barrels or, or plentiful barrels in the first half, and maybe as we get through the third quarter, it starts to tighten up. And, um, we, I, I mentioned this cause we saw yesterday a bunch of, um, spread option calls trade. So these, uh, July through DCE, uh, these would be one month spread. So July Augie, Augie SEPs, that Bach, etc. $1 calls traded and, uh, some one 50 calls traded. And I was just wondering if you thought, um, I, if I look out and say the June D spread looks like it’s around 40 cents a month, um, backwardation on that and, um, you know, is that, what do you think about that play? Uh, do you think that the situation in the second half of the year could get tight enough that we see dollar backwardation yeah, it’s a, it’s always, it’s always possible inventories are going to build in February for sure, because of the, you know, because of turnarounds, turnarounds. Uh, there probably, I haven’t building in March, April and may. And the EIA has some building way more than what I have. They had, they have them building from, we’re currently at four 29 and they have them up. They have inventories going up to four 77 in may. Um, um, like 20 to 30 million below that, but nevertheless, uh, built, uh, and then second half. Yeah. We, you know, a lot of that will depend on where the production curve, where production comes in, where the run, sorry. Yeah. EA has runs like way above last year and there’s completely wrong, you know, that’s going to be, there’s no way we’re going to be a million barrels a day on crude runs above, above last year. I think they’re thinking that we’re supplying the whole world on uh, you know, for, for uh, IMO 20, 20, you know, we’re not, um, so, but the, their, their data is there. They’re also wrong on that net exports, but it doesn’t really, you know, they’ve got a strong in second half of the question, can it get a dollar? I think it’s to get the spec rotations come off pretty hard though. Like the DS read these and the June DCE it’s come off hard. I think it could come off a little bit more and a dollar a month. I think that’s going to be tough.
Jim bananas, like deep out of the money call to buy. So, yeah, I think it’s, you know, somewhat of a long shot, but a possibility is that if I’m buying those anyway. Yeah. Yeah. Okay. Um, what else do we need to cover, Andy?
Well, I think we gotta get to price and then we’ll, uh, it sounds to me like your look, I mean there’s a consensus maybe a forming that we, this year we stay around $65 Brent and maybe you know, $6 under that for WTI. I think that’s 60 to 65 brand and you know, maybe 55 to 60 w WTI. Um, it looks like there could be a little more downside here. We did see on that spike for the, for the technicians among us. And I think I sent you a message. I think that was the mother of all key reversals. And you know, it does look to be like in the near term here we’re going to, we’re going to weaken so we can further, are we going the, you know, 55 it’s a, it’s an important level. Can we break that? Maybe we’ll see how, you know, we’ll, we’ll see. What sentiment is this? A lot of length in the market has really built up a lot of length. So, uh, you know, I’m sure we’re, we’re spitting some of that, some of that out right now. Yeah, that’s, that’s the, the most, uh, the strike with the most open interest is the June, June 55, put 28,000. So it looks like a, I’m guessing a lot of that’s hedging people. You know, you see that through the curve, the 55 and 45 puts are a little higher than the rest. And um, but still not, there’s no, there’s no huge open interest strike. It’s, it’s all spread out. So really, I mentioned the volume was down 30%. It’s hard to find out, you know, where the market is lining up in terms of, uh, how they’re trading this thing. But it looks like, as we, as we talked about, the hedgers are, are buying those puts. Yeah, that makes sense. Yeah. And the, and the December prices $55 now. So that’s a, I guess you can, you can make the little bit of money on that.
Right, right. Yeah, I think the hedging activity is as the market, you know, is that like the cow 21 got into, you know, 55 at the, I think that definitely picked up a lot of a lot of interests, but I think, I think it’s possible we could see low fifties, maybe, maybe even press 50, maybe, you know, depending on where, where, uh, where sentiment is, where overall macro sentiment is, you know, that may prevent us from really getting much below 50. Yeah. Um, it’s, it sounds to me like you’re saying 55 60 is, is most likely likely with a a F if it’s going to blow out one side of the other, it’s, it probably goes lower. Yeah. I think there’s more downside risks, more downside than upset then upside here. Yeah. And then, so, so for me, if I’m an option guy, I’m thinking I want to be selling options, but it’s a lot.
It’s oil. Right? Right. We talked about the geopolitical, exactly. Problems that could be anywhere. Yeah. That could be anywhere in, uh, you know, in Africa, South America. Yeah. Uh, and then of course there’s the infrastructure issues that seem to plague North America and Europe. So, um, yeah, even if you’re awake when that event happens, you, you still can’t do anything because the market disappears. It’s liquid until it isn’t right. Until it, yeah. Yup. Yup.
Okay. Uh, what else? Any, any, uh, any other comments and the, uh, check us out on a commodity research group.com. What else? I think we, I think we’ve covered everything. Okay. Everything. No, of course not. Yeah. It’s impossible to cover everything and a half hour, but, um, yeah. Yeah. I think, I think we went through a lot of the boldface issues and some of the not bald face issues, but, um, as usual it looks, it looks like it’s going to be a, uh, you know, it’s already been an interest that year.
Look what happened. I can’t believe we just came out of the gate and it’s, we came out of the gate. Yeah. Yup. Almost the $10 range. So, uh, yeah, you can’t even shut down for the holidays anymore. You know, it’s like there’s something going on, right. Always. So anyway. Okay, Andy, we’ll pick it up next month. We, uh, we look for us. We try to do this around, um, you know, post, uh, the, uh, [inaudible], um, release of their monthly oil report. Uh, we, we, that’s what we shoot for. We don’t always make it, but, uh, we’ll be around next month as well.