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 to talk about energy markets.
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Today is February 23rd and it’s the afternoon.
Andy, I think we know our starting point today. It’ll be the, uh, geopolitical arena. If you could just give us a little background on how important Russia is to the oil markets and you know, what sanctions might bring.
Okay, good afternoon, everybody or good week. Uh, or if you’re hearing this whenever you’re hearing this, um, hope you’re having a good day, but let’s talk with, uh, let’s talk about, uh, Russia and, uh, its role in, in the energy world. I think from a geopolitical standpoint, uh, most of you, uh, have been following the, um, developments, uh, with Russia and, and Ukraine. And, uh, I’m, I’m not going to do a play by play on, on the developments, but what I am gonna talk about are, uh, some of the numbers that the, the market has been, uh, obsessing about rightly so, Russia’s one of the largest, uh, oil producers. Uh, last quarter, they probably produced about, uh, 11 to 11.1 million barrels a day of crude and condensates crude was probably just around, uh, 10 million barrels a day. They’re also, uh, one of the world’s largest exporters of both crude and, uh, refined products.
Uh, crude export globally are, uh, of crude and condensates are over 5 million barrels a day. And, uh, of which half of that goes into, uh, Europe, the other half to, uh, Asia, Europe sports through, uh, pipelines, as we know, and, uh, also the, uh, uh, waterborne transport. They were also a big expert, as I said, of refined products. It’s probably a million barrels a day, at least, uh, of which, uh, most of that is, uh, gas oil, some gasoline, and of course, uh, heavy, heavy products as well as some, uh, as well as some NGLs. They are also a, as we all know, uh, a major exporter of, uh, natural gas, they export probably 33 to 35% of, uh, Europe’s needs through a variety of, uh, pipelines and through, uh, L and G exports. They, uh, as we know, uh, the pipelines go through, uh, go through the through Ukraine and also through, uh, Western Europe.
Now look getting back to petroleum for a second. When I neglected to say, is those crude exports to about 20 to 25% of European crude runs? So the Russian barrel is really important to, um, to European refiners, both in Western Europeans, Western Europe, Southern Europe, Eastern Europe, Russian crude finds its way into, um, you know, into the crude. And, um, certainly a loss of, of, uh, that big of a supply would be, um, really devastating for, um, for refiners in, in Europe, which is why the market of course, has been rallying sharply over these last couple of weeks as, as a, a potential invasion of, uh, Ukraine becomes, uh, more and more realistic.
Do you, do you, it, it seems like the, the sanctions are not gonna restrict the flow of energy out of Russia, at least, least for now. I don’t know if they’ll ramp up the sun ancients to, to do that, but it’s, um, you get a sense of a premium in crude or is it there’s just so much going on it’s hard to, for, for this, uh, potential of lost Russian barrels, uh, you have a sense of how much, where would we be if Russia backs away?
Well, given in that, uh, there’s
Been an unlikely event, I think, but
Well, that that’s really hard to measure Jim, because given that it looks like incredibly, the nuclear deal is about to, about to be signed, you know, which is, which is putting some pressure on the market and probably taking away some, some of the, a premium, I mean, I had, I had really thought that, you know, somewhere between five and $10 might be a, uh, you know, might be a premium to the market, I guess we we’ll, we’ll certainly find out, but, um, those are the numbers, that kind of number, I think the market has assigned a premium and certainly there’s been a lot of talk about a hundred dollars. Jim, you’ve been talking about it since last year with those options, right?
Yeah. I, I, it’s interesting what we saw. I’ll bring up the options early this time cuz um, it’s pretty interesting what we’re seeing, but yeah, early in 2021, we start seeing people buy calls a hundred dollars calls and, and for, for DEC of 2022, and it’s still remains the, uh, largest, uh, open interest strike over over 60,000. Um, there’s been more, obviously more call buying and call, spread buying as, as we rallied. And um, so this kind of the option market, I wouldn’t say anticipated it, but it’s not freaking out like the, it did when, um, the market collapsed around Thanksgiving when, when the virus hit. So, you know, it’s kind of, it’s a little more orderly. However, uh, we just saw March WTI options go off the board on February 16th and previous to that, there was a lot of, um, number, a lot of stuff in the press talking about an M invasion on February 14th.
And so what we saw going up to that 14th was the, the skew flipped. So the, the skew is the sort of the out of the money put valve measured against the out of money call valve. So typically oil has a negative skew to, uh, think about Mexico buying, you know, 200 million barrels to 300 million barrels worth of puts. And basically it blows out the volatility on the downside put. So we, so we compare, usually use a Delta of like 25 and compare the 25 Delta put and 25 deltas, a call and it’s usually negative. And it, uh, it flipped, it peaked on, on the 14th of February in, in the March option. And then March went off the board on the 16th. And so those, you know, it didn’t happen. So they, you know, they didn’t, uh, uh, those, those, those a lot of those options expired with us at the same time while this is going on, we’re seeing a lot of put buying as well.
So you’re the, the, the pattern often day, many days is that you see a lot more calls, trade than puts, but put open interest is increasing more than calls. So, so that’s partly, you’re seeing calls reds, but you’re also seeing people liquidating getting out of their call positions that they put on, you know, at, at much lower prices. So, you know, you say, well, so it’s a perfect, so options world. It is a perfect place for people to sort of, uh, put positions on that, uh, uh, reflect how they feel and the risks they wanna take. So, you know, you wanna, you wanna protect against or profit from a move up in oil prices. You buy calls because you know exactly how much money you’re spending on that, on that play. In the case of these March options, you lost, you know, you lost the premium, you paid out.
So at least you knew what that you knew the risk going in. It’s not like future. So on the downside, you got these high prices and maybe people are looking at Iran coming on. Um, so, and you’re seeing expansion like, and we’ll talk about a few minutes, uh, in the us producers are looking to, uh, produce more oil. And, um, a lot of them had hedge using futures at much lower prices and they hadn’t participated in, uh, a lot of this rally, uh, for some of their crude. Um, so that, so at these prices, a buy put strategy makes a lot of sense because if, if there is, you know, Russian oil taken off the market or, uh, you know, a, a serious war breaks out and prices soar, uh, producers will still, you know, participate in the high price, but they’ll have this downside protection.
So again, it’s a, it’s a perfect, uh, market for the options for the, these conditions. However, uh, it’s not, it’s not free, nothing’s free. So this call buying and put buying has bid up the volatility to about 45%, which doesn’t seem a lot. I think we were over 60% during the, um, decline in price back in, uh, you know, after Thanksgiving, but at, you know, $90, uh, 45% volume is pretty high. Just think about we, we set a, um, an all time record low back in 2014 in, in the teens of volatility, uh, when the price is a hundred. So, so typically when you see prices high, the VA crude, uh, tends to go down. So, so 45%, you know, the, the long term average is around 33%. So it’s like 10, 15 points over its average. So, so basically it’s telling you there’s something, you know, something, uh, potentially, um, uh, going on that would create, uh, a very volatile, uh, market, uh, down the road. So, uh, but that’s, that’s kind of what we’re seeing. We are, we, even on this rally, we are seeing some, uh, put, put buying and put open interest increas. So, and that, and that skew I talked about is still positive for, uh, April options. And it’s, it’s off its high though. So, um, but it’s still in that weird, um, sort of not usual, uh, situation, obviously, cuz it’s because of, uh, Russia, Ukraine, uh, situation
And, and throwing Iran
And Iran in Iran. Yeah. And then yes,
Yes. And we’re, we’re in an environment of, uh, very low inventories, you know, exceedingly low inventories we’re running globally, uh, O E C D inventories are something like 220 million below the, uh, five year average, uh, a number of day supplies below the, uh, day supply below the, the five year average, which, uh, certainly I think, you know, adds to the volatility in the market. You know, it isn’t like you can just go, uh, into storage to, to make up what could be, you know, any type of, uh, any type of shortfall, you know, you, you’ve gotta, you have to buy the physical and as a result, you know, we’re seeing huge, huge premiums on the, on the physical market. You know, the, the BFO is, is trading something like, um, $3 over, uh, dated brand. So, you know, you, you’re looking at physical prices, you know, in over a hundred dollars. So we’ve been over, we’ve actually been over a hundred dollars on the physical market.
Right? Yep. It’s kind of, yeah. And, and, and, um, that’s, that’s the reason why people were buying calls all, all last year is they’re anticipating this tightness. Um, right.
And that’s the fundamental part. Um,
You know, no doubt. I mean, the market has, um, you know, as I mentioned on the inventories we we’ve had, um, um, I guess this is gonna be this quarter, there could be a slight build, but if there isn’t, it’ll be the eighth consecutive quarter of, uh, drawing stocks.
Yeah. Let’s why don’t we talk about that cuz um, I guess the EIA and EIA are looking for oil surplus on the road, despite, I mean, I I’m, I’m sure they’re expecting Russian oil to be on the market, but um, how, how do they come to those and you, and you’re looking for circles, how do you come to that? Uh, why don’t you take, uh, the, the demand
I’m looking for, I’m looking, I’m still looking for slight surpluses. You know, this is without, without Iran. I have a, a surplus this year of about half a million barrels a day with slight increases in, uh, you know, in, in every quarter. And you know what I’m looking for, it looks like non OPEC production. We’re gonna have a good, uh, ING increase. You know, at least I think it’s gonna be well over 3 million barrel a day, uh, of increase from, uh, non OPEC producers who will help to make up some of the shortfall, not all, but some of the shortfall from, uh, OPEC plus we’re gonna see, I think us production is gonna be up over a million barrels a day, throw in an increase of four to 500,000 barrels a day of, uh, NGLs. And there’s a million and a half right there from, uh, from the us Canada too. You’re looking at couple of hundred thousand barrels a day and there’s, there’ve been positive developments in, in Argentina. The VA the Vaca wear day is, uh, actually showing some, some
Yeah. It’s alive. It’s yeah. It’s a live ganna as well. Russia too is expected. Now there’s a, there you don’t know Jim. Yeah. You don’t know where those, you know, you don’t know where Russia production’s going to, um, you know, come in on, right. Whether, whether, you know, they, they reduce production to, you know, counter counter the west, you know, it, it, it’s obviously very unclear and, and Iran too, you know, is, um, unclear to say the, to say the least, but let’s talk about Iran cuz that’s, that’s really important. Uh, Iran is producing two and a half million barrels a day before we pulled, before we, uh, pulled out of the, uh, J CPOA. They were 3.8. So, you know, it’s possible that they can provide, uh, quickly a half million barrels a day at least. And uh, possibly up to one, 1.3. The other thing about Iran is 9 million barrels of, of Iranian and crude and condensates in, in storage. So, you know, we, we can, we could see as soon as I thought it was may, but uh, I, I guess the, the administration was talking about possibly as early as April, they talking more arch gym. I don’t,
Yeah, I just, I, I saw a blip from, um, a comment that, uh, Jen Psaki mentioned that oil could come out within a couple of within days. I assume. They mean after the
Negotiations are making progress. I assume they mean oil could come out within days after they, uh, agree, but, um, yeah, they’re probably ready to roll.
Yeah. Well, that’ll be all about the architecture of the waivers and, and how the sanction could be, could be lifted, but you know, that’s a, that’s a fairly, um, significant that’ll that’s, you know, that’ll change the balances again, depending on where, um, you know, where Russia comes, but Russia is supposed to grow this year crude plus condensates, you know, they could be up seven or 800,000 barrels a day just assuming, you know, that nothing else happens, but that, that’s a huge assumption to say the
Least. Yeah, right. This, this podcast may have, uh, a shelf life of a few minutes based on the way that things are developing. But, um, we just have to go with what we can go with right now. Right. Um, so let’s look at, on the demand side, Andy, there are a lot of countervailing forces as usual where I, I think, um, most of these, uh, the big three have demand, uh, increasing maybe three and a half million barrels this year.
And, um, yeah,
Right. Where do you, where do you see, where do you come out on this? And yeah, we’re, we’re right.
We’re pretty close to that. We’re, we’re at, uh, three six for, uh, demand for, um, CGS estimates. So we’re, we’re right. You know, we’re right there. Some analysts are looking for like four to four and a half million barrels a day increase. And, um, you know, I haven’t changed them yet, but if I do, I, I think it’s gonna be a downside, uh, correction, Jim, you know, I’m on the demand. Estimates certainly is certainly the, the, um, virus has, has, you know, it, it seems it’s having less and less of an effect on, uh, demand. And, and as you pointed out, um, you know, there’s a, there’s a tremendous amount of pent up demand. And hence I think that’s one of the reasons why a lot of analysts are looking for, for, uh, a lot of the banks are looking for big increases, you know, when we start seeing, uh, increases in gasoline, uh, jet fuel, certainly. And, uh, and diesel, you know, but we we’ll have to see what, what the, um, what higher interest rates, what, uh, inflation, what a possible wider war in Europe, um, brings to the, um, brings to the demand table. So, um,
Not, not to mention, uh, hefty utility bills from the winter time.
Yeah. That’s a great right. Exactly. I mean, people are getting, people are gonna go into shock when they start seeing their January and, uh, their January bills and, and certainly Europe has gotten absolutely clobbered.
Well, I, I know I bring up New York often cuz that’s where I live. But, um, you know, we, we don’t, we restrict pipeline flow of gas from, uh, Marcellas region, which is just, you know, stones throw across the border. And um, a lot of people voted to, you know, not frack in New York and not allow gas. And, and guess what the big complaint is, everybody’s complaining about their gas bills. Right. I wish, uh, somebody would explain, you know, this is, this, this causes this, you know, but, um, that’s not the way things work, but um, yeah, we, we have access to it, you know, a whole reservoir of gas, not too far away, we can’t get at it. But, um, anyway, that’s a, it’s a, it’s a real problem. Utility bills. It’s a problem for the Northeast is also also a big problem for, as you talked about, Europe is getting clocked even worse than we are. So that’s gotta take some, I don’t know you, what do you, how do you react to that? Do you still do, uh, as many trips? Do you, do you drive? I don’t know, but um, we’re gonna find out,
Yeah. I mean, people are gonna have, you know, less, certainly less to spend, uh, and less wages keep, you know, keep up with, uh, with inflation and then, you know, you don’t know about sentiment. So I, I, I, you know, plus, you know, if we’re not growing, you know, if the growth, if us, if global GMP growth, GDP growth is, is, um, stifled at all, obviously that’s gonna have an effect on demand. So I, I think these demand, I think a lot of these demand forecasts may be, may be too optimistic. As I said, I haven’t changed mine yet, but I’m not that far. I’m not, we’ll see what happens. So you’ll see how events develop.
Yeah. It’s a, it’s a moving target. I mean, we, it looks like, um, more companies are going back to the office, you know, in, in, um, you know, mid to late March. So, um, you know, there’s all these countervailing, uh, forces and, and we, I, I’m guessing that your demand number as the IEA, the E I OPEX demand number will be revised often over the next few months.
Well, the IA just gave us a nice revision, you know, they, they just decided to, uh, yeah, look at 800,000 barrels a day to our baseline. Yeah. Um, which, you know, made a lot of sense because of their, they always had imbalances on their balance, on their balances,
The missing barrels.
Yeah. The missing barrels.
They found them
Barrels have been found.
Yeah. That I think they, uh, they found, uh, was it China, China petrochemical demand and, um, the Saudi LP G consumption.
That’s exactly right. Those are, those are the two biggest, uh, biggest factors. Um,
Yeah, it’s, it’s hard as you know, Andy, it’s hard to count all the barrels all the time. It’s
Impossible. I would just like to, uh, you know, hit the, uh, hit the weekly numbers more than, uh, you know, once a month or whatever, whatever it is, you know, it’s difficult.
So, um, a couple, a couple random things, but, um, Iran is probably taken an edge off the price. I mean, you said that the, the price got up to a hundred, but none of the futures price didn’t get up there. I don’t think Brent, uh, future
Rent got up to 99, 50.
Okay. That’s close enough.
But it’s, um, dampen now. And then you think that’s because of Iran coming on soon.
Yeah. I, I think, I think that’s definitely a factor, you know, the us is trying to say, we’re not gonna us is not trying, they are saying we’re not gonna sanction, um, oil or natural gas, or we’re not looking to sanction oil or, uh, natural gas, but, you know, it doesn’t mean that there could, could be damage on the pipeline lines if there’s a, if there’s a, you know, full scale, full scale invasion or, you know, Russia pulls something. So, um, and, and if they do, you know, if there is a, if there is a disruption, you know, certainly there, there will be release of, um, of, uh, strategic reserves globally. I, I think we could look for that right away. So that that’s something else that, that, you know, could, could lend a, a damper, you know, we have to see how, how events, you know, we’ll have to see how events play out
The other, um, interesting is, uh, refining, would you say it’s kept up with demand or it’s behind,
Well, let’s see margins. Well, because Brent just went vertical. Um, you know, refining margins in Europe are horrendous right now. Um, you know, us margins are, are, uh, you know, they’re okay. The cracks have been, you know, cracks have been rallying, you know, steady, uh, runs still are, well, we’re going to turn arounds now, but, um, you know, we’ve certainly lost a lot of, um, uh, capacity, you know, there, there have been, and we’ve talked about this, you know, over the last, I don’t know, Jim, like three, four years more longer, maybe.
All the plants that have have closed in the, uh, in the us. And that’s, you know, that’s demand for crew. So that that’s, that’s where we’re not gonna be where we were at the peak on runs, but that’s the bad news. The good news is that refiners are running, uh, a lot more efficiently and, uh, able to produce, you know, higher yields of both diesel and, and gasoline. Um, you know, without that excess, without that capacity. And most of those plants that closed were, you know, needed to be closed.
You’re how can I put this? The, uh, runs in pad two are decent relative to history, right? I mean, a little bit low, but lower, but not that much, but, um, pushing stocks are getting low relative to history. Is that, do you see that as a problem or is it, is we back to just timing?
I don’t, I don’t think it’s a problem. It certainly has contributed to the backwardation, which is coming off some in Cushing, it’s going nuts in Europe, but, um, you know, in Cushing, the, it looks like the, the M one M the, the futures, the WTI futures are, are softening somewhat. It’s still, you know, well over a dollar, but it’s not $2. I think the, you know, one thing about Cushing is that it’s, we don’t need that much inventory, uh, given, given that some of the changing patterns on these, uh, uh, pipelines Cushing is basically just, um, you know, like, uh, uh, train state, you know, I mean, comes in, goes out, you know, so, um,
Unless people are waiting, it’s less, less barrels. And to, to, you don’t need to store them. They’re just going right through it.
Right. That’s yeah. It’s a through station. It’s a through
It’s a transit point. And, um, so we probably need less, I don’t know, you know, the, the, uh, we’re running at, uh, like half actually almost exactly half the five year average. So we probably need more than once there, but operationally, I, I think we’re, you know, I think we can probably get by with this kind of number, but, uh, higher would be, would certainly be better.
Right. What else, anything you want, what about prices going forward? I know this is, uh, anybody’s guess, but what do, what are you thinking if
Anybody’s guess I’m, I’m not, I think you could tell by my, some of the things we’ve talked about, you know, I’m, I’m not like crazy bullish here. Um, I’m just not, I, I certainly, yeah. Could the market spike, of course it could spike, you know, depending on, uh, depending on events, but, um, you know, if, if Iran, if that deal is done and with Iran, it’s not done till it’s done you, that’s a, that’s a, that’s a pretty big game changer. Obviously what happens in with, uh, Russia being such a, a huge producer and exporter, obviously that’s a, you know, that that’s a big deal. Um, and you know, that, that, one’s kind of hard to handicap, but don’t, you know, don’t miss that there are strategic, you know, there are reserves,
Are you confident that OPEC plus can eventually meet its targets?
No, they’re not gonna meet their, there’s no way that’s, that’s not now, no know you could add, maybe if you add, uh, they’re running like 900, hundred thousand barrels a day below their, below their targets. And, um, you know, the, the key there is, as we’ve discussed, you know, you, you have producers like mostly the African producers that, that just can’t, you know, cannot make their, uh, their quotas. Um, no matter what, you know, maybe, maybe if there’s billions of dollars of investments pouring into those countries over the next few years, you know, by 24 or 25, they can make their 2122 quotas, but they can’t, you know, they can’t now and sanctions are still on Venezuela. Uh, but they’re, they’re not really, uh, they’re not really quoted, you know, they’re not, they’re not under, uh, quotas, you know, and the Saudis version golf producers seem to be indicating for now that they’re not going to, um, Inc the next meeting’s March 2nd, that we’re still gonna go in this incremental 400 a day, which is in reality, 200 a day or less, you know, the spare capacities in, in Saudi and, and UA and, and, uh, Iraq.
And, um, you know, doesn’t look like presently, as we speak today at this time, that’s, you know, Saudi really wants to increase production. Right. But if, if there’s a disruption, you know, the us is obviously gonna put on some, you know, be serious pressure on, on the Saudis to, to increase. Uh, and we’ll see, you know, we’ll, we’ll see where they fall.
Right, right. Yeah. That’s uh, so let’s say that we get your 500,000 barrel a day bill for 2022, and we have the demand that you have 3.6 increase. That’s still gonna be a tight market when we come out of the year. Right. I mean, that’s you talking about? Oh
Yeah, yeah, yeah, yeah. Uh, I, I don’t think we’re looking at any type of price, you know, collapse into like the fifties, you know, or, or maybe even the, these could I see seventies yeah. Easily, right. Easily, you know, if things clear up in, in the Ukraine and the Iranian barrels come on and we start rebuilding inventories. And the other thing is there’s a tremendous amount of length. And ironically, it’s in the us market, not so much in Brent. I think Brent’s like five to one long to short WTI is like 15 to one. Um, you know, you start unwinding that too, right. In the market, the market could come off hard. No, maybe not hard, you know, uh, could come off from these levels.
Yeah. There’s a, there’s an OCN sub virus coming out. Uh, I just was reading about it today. Apparently it’s even, uh, uh, it, it it’s even easier to catch, but they think it’s mild. So it probably won’t have it’s, it’s like a, I think small percent in the us, but, uh, growing, but, um, yeah, we’ll see. It, there’s also the possibility of another sort of, uh, variant coming out, which we’re we’re I think we’re kind of like saying, bring it on. We’re not, we’re going back to normal whether, right.
Like you said, as you said earlier.
Yeah. Well, I said before we got on, on the people had
Yeah. I mean, I, I was telling Andy before we got on here that I had, I had three shots and I got COVID two weeks ago and now I it’s like, uh, I’m free. I’m, you know, I went, I’m going to my gym of I’m going out, you know, in, in this, this area seems to be the same though. I don’t see a lot of people wearing masks and it is a very masked up place. So, um, yeah, I think, uh, yeah, I don’t, I, I, I think it’s gonna be a tight, I, I guess I get nervous when I’m with the consensus and a C seems to be that this is a tight market and we’re more likely to go to something like, you know, one 15 than we are to, uh, say 75, you know? And, and I agree with that, but I just don’t like being in that camp because I’m, I know I’m with the consensus.
Right. I mean, some people are, are, you know, you have, so I’m, uh, some of the banks and analysts who are completely, you know, who who’ve like Xed out to bearish, you know, some of the big, some of the bearish variables saying the market can’t possibly go down.
And, and when that happens, you’re in a dangerous spot.
Yeah. That’s what makes me nervous. Yeah. To get rather be a put buyer than a call buyer right now, but we’ll see.
Yeah, me too.
Uh, anything else, Andy? You wanna add? Cause it’s, uh, this, this is, uh, we always say there’s a lot going on, but this market is very fluid. Like I said, we, we, tomorrow we, we could get a piece of news and everything’s flipped.
Exactly. You know, we’ve lived through, we’ve lived through, um, a geopolitical developments in the oil market, our, our whole careers. And certainly we went through two of the biggest in, in where, you know, there was a war in the Persian Gulf, which is one of the worst, you know, worst possible scenarios for, uh, for oil. I think one thing that we did learn is, is what you think is gonna happen, you know, may not necessarily happen. And, uh, you know, I think all of us who have of a certain age, uh, will remember the night that the bombing started in and, uh, you know, in Baghdad. And, uh, everybody was like, oh, you know, the market’s going to the moon. And it went straight down.
Different scenario, different situation. Yep. But, um, I, I, I don’t think there were, you know, there were all that many people who were handicapping that it was gonna go straight down.
No, not that, not that hard and not at all. I remember that very much, uh, big it’s one of the biggest, uh, drops in implied Val, we, we ended up going from something like 1 2100 20% down to, I don’t know, 85 in one day. And we, um, we got a lot of our customers short vow at 85. They’re, you know, they’re saying, wait a second, we just dropped so much said. Yeah. But the, the response from Iraq was so sort of feeble that it was kind of clear that somewhat clear that the market was not gonna, it was gonna bounce back from its collapse, but it was gonna kind of move sideways more like the, the volatility, worst days of the volatility was behind us. And, and we had some people sell 85% all the way down to 20. And, uh, they had some of their best years ever. Um,
Yeah, only, only to, I used to give out those option of the year awards option traded the year awards. And I, I gave it out and, um, uh, next year, a lot of those folks gave, gave a lot of it back. So I became the option trade of the year award became a curse. It was, it was like, it’s like four years in a row. I gave it out. And the following year, the same trading group or person kind of got smacked around. So I stopped, I stopped giving it out anyway. That’s uh, that’s all I have Andy. We are, uh, I think any, anything else you wanna add?
If you have any questions or want get a hold of us, my email address is firstname.lastname@example.org researchgroup.com. Feel free to just drop me an email and I’m on LinkedIn, Andrew Lebow.
Great. And I will see you next month.
All right, Jim. Thanks.