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oil trading

Tags: oil

2 kinds of oil traders:

  1. betting
  2. actually taking orders
  • taking oil is highly regulated and extremely expensive
  • once terminals run out of space, then you are effectively at the behest of the counterparty and will pay anything to get out of the situation
  • negative oil pricing impacts models like black scholes

Ticker Strategy

Futures

Regular Futures

  • “Root Ticker” + “Month” + “Year”
  • Example: “CL” + “Z” + “2” = CLZ2, (WTI crude) expiring December 2022

Active Tickers

  • “Root Ticker” + “A”
  • Example: “CLA” - WTI active
  • Best gauge of market sentiment

Generic or Rolling Tickers

  • “Root Ticker” + “1”
  • “CL1” - Front of the month

Small Oil Companies in covid

  • Small private oil companies are mostly employee owned
  • Gains from market volitility
  • Examples (all are commodities trading companies):
    • Vitol
    • Trafigura
    • Mercuria
    • Gunvor
    • Glencore
  • Markets in contago allows for them to make money
  • “financial markets look forward”

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