Skip to main content
Oil Producer Report

Crude Oil Trading Report: Scenarios ahead of OPEC & G20

By November 29, 2018No Comments

The market setup is at a critical juncture with both the G20 this weekend and the OPEC meeting on Dec 6th. The outcome will be decisive for the direction of oil prices.

Here are our scenarios on what to expect

 

[emaillocker id=”2858″]

 

Strong demand growth “bailed out” crude oil in 2016-18, not just OPEC+ cuts. The difference this time around is that macro may not be as supportive as a late cycle economic growth limits oil demand growth.

Coincidentally machines have taken over the direction of oil prices:

Our replication of momentum-driven models point to 2 of 3 main signals flashing “sell”.  Our analysis of quant funds points to significant capital on the side-lines that could increase short oil exposure. 

On the other hand, discretionary and fundamental buyers have vanished.  There is no firm data on this but our conversations with market participants point to trading desks and funds with little appetite to buy oil at current levels due to yearend PnL losses caused by recent volatility.

With this in mind, we put our scenarios forward for OPEC + G20 meetings, combining our proprietary analysis on positioning data, analysis of aggregate risk (strikes) positions and trading experience.

BONUS CHART

President Trump has effectively put a ceiling on oil prices – arguably this ceiling is ~$70/bbl Brent ($75 max from the volume of tweets) –  It will be interesting to see if Saudi/Russia can keep the put (floor) in place.

Source: The Oxford Institute for Energy Studies

Source: The Oxford Institute for Energy Studies


We provide unbiased market and derivative advice. To discuss further implications and optimal hedging strategies, contact us  contact@comtradingcorp.com

[/emaillocker]

Leave us feedback

[contact-form-7 id=”3212″ title=”Feedback”]

Commodities Trading Corporation is a London-based private advisory company specialized in commodity risk-management, hedging & trading. We service a growing need in the natural resources sector for unbiased and strong expertise and provide our services to an array of corporate clients and financial institutions. We are experts in derivatives and monetizing volatility and develop corporate strategies for hedging energy portfolios, using bespoke derivatives solutions for price risk mitigation.

For more information on CTC, insights on risk-management strategies & trading views, contact us at contact@comtradingcorp.com.

Authorised and Regulated by the Financial Conduct Authority (“FCA”).

CTC Marketing Commentary Disclaimer – This marketing communication has been prepared by Commodities trading Corporation personnel. The information contained within this marketing communication is general market commentary providing only the views an opinions of CTC team. The views and opinions expressed herein may be changed at any time without notice. This material provides only a limited view of the market and does not constitute investment advice and or investment research. It has not been prepared with the legal requirements to promote the independence of investment research. It is also not subject to any prohibition on dealing ahead of the dissemination of any investment research. The information provided does not constitute an inducement, invitation or offer to engage in any investment activity. CTC neither makes nor gives any representation or warranty, express or implied as to the accuracy or completeness of the information and opinions contained and no responsibility or liability is accepted by CTC for the same and CTC shall not be liable for any direct, indirect or consequential loss or damage suffered or incurred by any person upon reliance of any statement or opinion or other such information. This communication is directed at CTC‘s professional customers and not intended for retail or private customers.