Jump to content
  • 0

Crude Oil


NeilL

Question

With the price it was, how Oil has flown back is a bit of a surprise considering there’s still way too much of it, with not enough storage. What’s everyone’s thoughts on this? Are these prices a false dawn?!

Link to comment

13 answers to this question

Recommended Posts

  • 0
37 minutes ago, NeilL said:

With the price it was, how Oil has flown back is a bit of a surprise considering there’s still way too much of it, with not enough storage. What’s everyone’s thoughts on this? Are these prices a false dawn?!

Could very possible turn out the same as the last (May) futures expiry, a large drop. Because traders are still buying Longs (futures) and oil producers are obliged to deliver on expiry but the traders don't want to take delivery and besides there is no storage capacity so they'll end up paying someone to take the contacts off their hands (price drops below zero).

 

  • Thanks 1
Link to comment
  • 0

I presume that would happen at the June future expiry date or not long before that? What’s around the 21st isn’t it?? Obviously nothings set in stone but it does look like it will follow the same pattern as before. Certainly worth keeping an eye on!

Link to comment
  • 0
7 minutes ago, NeilL said:

I presume that would happen at the June future expiry date or not long before that? What’s around the 21st isn’t it?? Obviously nothings set in stone but it does look like it will follow the same pattern as before. Certainly worth keeping an eye on!

correct, CME June expiry is 21st of May, IG's is late afternoon 20th of May (uk time).

see pic.

MayOil1.png.d0dd23676458890d0fbf2e4c12976010.png

Edited by Caseynotes
Link to comment
  • 0
18 minutes ago, NeilL said:

Also Caseynotes if I took out a June future contract at sell at roughly what is now(1900) I would not have any overnight charges correct?

that is correct, there are no overnight charges on futures contracts. timing as ever is the problem, note in the chart that though there was tailing off in price from April 17th the collapse was sharp when it came as those holding longs tried to sell them but found no takers (lack of storage capacity) and so they had to pay to get rid of them in the end (negative oil price).

So even if a collapse around next expiry does come price may still rise for a while yet and so there is risk of getting stopped out of a short. 

This is the type of circumstance where an option might offer the better trade.  

  • Thanks 1
Link to comment
  • 0
26 minutes ago, Caseynotes said:

that is correct, there are no overnight charges on futures contracts. timing as ever is the problem, note in the chart that though there was tailing off in price from April 17th the collapse was sharp when it came as those holding longs tried to sell them but found no takers (lack of storage capacity) and so they had to pay to get rid of them in the end (negative oil price).

So even if a collapse around next expiry does come price may still rise for a while yet and so there is risk of getting stopped out of a short. 

This is the type of circumstance where an option might offer the better trade.  

Worth noting that some options expire one or two days before the actual future contract does. So if that is the case, with the option you miss out on the last day of fun that the US Oil May contract showed. 

The same can apply to automatic rollover if I'm not mistaken, i.e. you get rolled over to July contract before the day of the June contract expiry.

  • Thanks 2
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Posts

    • Sainsburys full year earnings and Unilever’s first quarter trading update both say the same thing, UK consumers are in for higher prices. The war in Ukraine, supply chain issues and the effects of ongoing Covid all to blame.      
    • US Dollar (DXY) Daily Price and Analysis US Q1 GDP may stall the greenback’s advance. A 20-year high nears for the US dollar. The multi-month US dollar rally continues with the greenback printing a fresh high today ahead of the first look at US Q1 GDP at 12.30 GMT. The US dollar basket (DXY) has been boosted by renewed weakness in the Euro and the Japanese Yen, as investors move from lower-yielding to higher-yielding currencies, while safe-haven flows continue to benefit the greenback. The US growth release later in the session is expected to show a sharp slowdown from the robust Q4 figure of 6.9%. The markets are currently pricing in growth of just 1% for the first three months of this year, with the slowdown mainly due to a reduction in inventory accrual over the quarter. This release is unlikely to move the greenback, unless there is a large miss or beat, as the Fed believe that 2022 US growth will be robust enough to let them tighten monetary policy sharply without damaging the economy. The latest US Core PCE data – the Fed’s preferred inflation reading – is released on Friday and this may have more effect on the US dollar than today’s GDP data. For all market moving economic data and events, see the DailyFX Calendar. The ongoing US dollar rally has been aided by weakness across a range of G7 currencies including the Euro, the Japanese Yen, and the British Pound. The Euro continues to battle with lowly growth expectations, exacerbated by energy concerns, the British Pound is mired by weak economic data, while the Japanese Yen is in freefall as the BoJ continues with its ultra-loose monetary policy.   The US dollar continues to press higher and looks set to break above 103.96, the March 2020 high. Above here the US dollar would be back at levels last seen nearly two decades ago. The March resistance will likely hold in the short-term, especially with month-end portfolio rebalancing at the end of the week, but US dollar strength is set to continue in the months ahead. USDOLLAR (DXY) WEEKLY PRICE CHART – APRIL 28, 2022 {{THE_FUNDAMENTALS_OF_BREAKOUT_TRADING}} What is your view on the US Dollar – bullish or bearish?   Apr 28, 2022 | DailyFX Nick Cawley, Strategist
    • While Tesla has nothing directly to do with Elon Musk buying Twitter - TSLA stock closed down 12% on news that Musk may have to sell stock and use other holdings to stand against the loan to finalise the purchase of the social media giant.        
×
×
  • Create New...