Oil instability: in just two trading session quotes of “black gold” soared to 6%, although this dropped by 20%.
The drivers are each time totally different: this can be someone’s statements, forecasts or statistics. Experts, it seems, do not quite understand what was going on: some predict a further decline, while others are expecting growth, and very, very violent.
So, for example, a renowned oil trader Andy Hall drew attention to the extreme volume of positions on the slide. It is known that this imbalance often results in the reverse movement: just start playing against the crowd, forcing them to close their positions. And this, in turn, makes the quotes move up. Something like that, by the way, it was possible to observe after the collapse in January of this year.
But that’s not all. Now there are conditions for speculation with physical oil, and therefore the demand will get nourishment even with this direction. The fact that the so-called contango – the price difference between the distant and near futures – covers the rental costs of the tanker.
That is economically justified look the purchase of oil and its storage in the tanker for resale at a higher price in the future. Profit, though not fabulous, but guaranteed, and such operations are very fond of oil speculators. The arithmetic is simple: the tanker class VLCC costs $25-28 thousand per day, when renting for six months is equivalent to $2.25 to 2.52 per each barrel. Contango in average for last month was $2,85 – by the way, about 4 times more than in April. That is, if you buy oil on the spot market and sell futures with delivery in six months, the cost of the tanker completely whacks and the operation will be profitable.
Although this factor is temporary, it always has an impact on the market.
In General there is a feeling of deja vu. Like a year ago, almost the entire first half of the year, oil futures were on the rise, and then began to decrease.
The fall then was interrupted at the end of August, when, due to manipulation of the options trading quotes in just five trading sessions has soared by almost 30% – a move that is unprecedented in history.
Now again in August, and in two days the oil has already risen by 6%. That is, the probability of the repetition of something similar is still very high.
