Yearly Archives: 2017

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West Texas Intermediate crude oil for April delivery CLJ7,

West Texas Intermediate crude oil price raised for April 2017

West Texas Intermediate Crude Oil Price

 

Oil futures remained higher Thursday after spiking to a session high following a smaller-than-expected rise in weekly U.S. crude inventories.

 

West Texas Intermediate crude oil for April delivery CLJ7, +2.16% on the New York Mercantile Exchange was up 97 cents, or 1.8%, at $54.56 a barrel after trading as high as $54.94 after the Energy Information Administration said U.S. crude supplies rose 600,000 barrels in the week ended Feb. 17.

 

Analysts surveyed by The Wall Street Journal had forecast, on average, a 3.4 million barrel rise. Data from the American Petroleum Institute, an industry trade group, late Wednesday had shown an 884,000-barrel.

 

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Oil prices fell after large rise in U.S. crude inventories

Oil prices fell on Wednesday after a government report showed a large rise in U.S. crude inventories.

It signaling ample supply even as OPEC achieves record compliance with its output cut accord.

 

 

U.S. inventories rose by a larger-than-expected 9.5 million barrels last week to a total of 518.1 million barrels in the week through Feb. 10, the Energy Information Administration’s (EIA) reported.

 

Analysts expect U.S. crude inventories to have risen by 3.5 million barrels, for the sixth straight week of gains. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 702,000 barrels, EIA said. Gasoline stocks rose by 2.8 million.

Energy Information Administration

The Energy Information Administration sunk oil markets deeper into despair reporting a build of 13.8 million barrels for commercial crude oil inventories in the U.S. Total commercial inventories are at 508.6 million barrels, above the upper limit for the season.

A day earlier, the American Petroleum Institute reported the second-largest weekly inventory build ever in the history of records, at 14.227 million barrels, versus expectations of a 2.38-million-barrel increase.

Last week, both EIA and API reported substantial builds in inventories, with the EIA figure at 6.5 million barrels for the week to January 27, exceeding API’s. 

Volatility Trading

 

Besides some individual standouts in the Multi- Strategy and Discretionary categories, the Volatility trading sector were the rock stars of 2016. This space is growing each year, and becoming more diverse in the process.

 

 

Where we used to see a steady diet of vanilla option selling here a space has added new strategies incorporating VIX futures, with what once was a purely short volatility space rapidly becoming more and more of a volatility trading space, able to profit from either increases or decreases in volatility.

 

For more on how this sort of trading works (buying and selling the fear gauge futures), we outline it all here and here. The short version is that each Volatility manager tends to approach the VIX from a market structure standpoint – trying to capitalize on its unique tendencies of being a “quadrative” of sorts, (a derivative of an index of a derivative of an index) where arbitrage opportunities can exist when one of the four components of that “quadrative’ doesn’t keep pace with the other legs.

Crude Oil Market In 2017

USA has steadily increased its crude oil production over the past decade, and in 2015, the country produced 88 percent more crude oil than it did in 2008. Government researchers also estimate that the United States was the world’s largest petroleum and natural gas hydrocarbon producer in 2015. This is truly a new era for American energy.

The United States is once again an exporter of crude oil, with a January 2016 shipment marking the first freely traded U.S. crude in about four decades. Forecasting the oil prices for the next month or next year, that has always been a game of hit and miss. 

All the more so in the past two years since the oil price crash began. Oil prices rose up in anticipation of tighter crude supply going into 2017 comparatively to 2016.

Traders said the higher prices in front-month crude futures were due to expectations of a tighter market. US West Texas Intermediate (WTI) crude oil futures were up 31 cents at $52.21 a barrel.

Here we covers major issues affecting the world oil market and provides an outlook for crude oil market developments for the coming year.

 

Crude Oil Market Opportunities in 2017

Heading into 2017, the oil price predictions by major organizations and investment banks are generally not widely diverging and hovering in the US$50-$60 range, but there have been some wilder viewpoints that are phenomenally bullish or direly bearish.

The US Energy Information Administration forecasts US crude oil production to average 8.7 million b/d in 2016 and 8.6 million b/d in 2017. Forecast production in 2017 is almost 100,000 b/d higher than in the previous forecast.

In Russia, recent oil production has been higher than previously forecast, with production exceeding previous records in recent months. In addition, the start-up of fields has resulted in a higher-than-expected outlook for Russian production. Russia’s oil production may increase 190,000 b/d in 2016 and 20,000 b/d in 2017.

Brent crude oil prices are forecast to average $43/bbl in 2016 and $51/bbl in 2017, $1/bbl higher and $1/bbl lower, respectively. West Texas Intermediate crude prices are forecast to average about $1/bbl less than Brent in 2016 and in 2017.

“Pricing forecasts embed a sequential 500,000 barrel-per-day increase in U.S. crude production, raising domestic output to 9.2 million barrels a day by the end of 2017,” the bank said.



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