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Crude Oil Price Movements
Graph 1.2: Nymex WTI price vs.
speculative activity, 2014-2015
Graph 1.3: ICE Brent price vs.
speculative activity, 2014-2015
The
daily average traded volume
during June for Nymex WTI contracts dropped
41,471 lots to average 636,128 contracts, while ICE Brent daily traded volume rose
61,109 contracts to 685,965 lots. The daily aggregate traded volume in both crude oil
futures markets increased by 19,638 contracts to around 1.32 million lots, equivalent to
around 1.3 billion barrels per day. The total traded volume in Nymex WTI was up,
reaching 13.99 million contracts, while ICE Brent was sharply higher at 15.09 million
lots.
The futures market structure
Although all three markets remained in contango, the
Brent contango
widened over
June by close to 25¢, to reach $1.31/b (M1-M3). A surplus of unsold prompt loading
North Sea and West African crude cargoes has been putting prompt differentials under
pressure. Supply has been strong and European and Asian refineries have not bought
as much crude as expected. Strong production from the Buzzard field and the deferring
of a maintenance shutdown to October from June has boosted supplies. The North Sea
was also cluttered with tankers carrying cargoes that have failed to find buyers, despite
European refineries running hard to take advantage of strong margins.
On the other hand, the
WTI contango
eased by almost 50¢/b, while the gap between
M1 and M3 narrowed from $1.20/b to 70¢/b. Successive weeks of crude stock draws at
Cushing, Oklahoma, higher US refinery runs and reduced incentive to import crude for
storage amid narrower WTI intermonth contango have all reduced crude availability.
Expectations also persist that crude production is set to slow, supporting the WTI.
The
Dubai market structure
was flat over the month with the M1 to M3 space moving
from minus 88¢/b to minus 82¢/b, a 6¢/b contraction. Firm demand from Asian refiners
continued to support the Middle East crude market, but signs of higher arbitrage
shipments to the region created pressure. Complex refining margins in the Singapore
hub were holding well above average for the past year, boosting demand for crude,
though Brent's narrowing premium to Dubai made some Asian refiners consider taking
regional and Atlantic Basin cargoes instead.
100
150
200
250
300
350
400
40
50
60
70
80
90
100
110
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Dec 14
Jan 15
Feb 15
Mar 15
Apr 15
May 15
Jun 15
US$/b
Managed money net long positions (RHS)
WTI (LHS)
'000 Contracts
Source: CFTC.
0
50
100
150
200
250
300
350
40
50
60
70
80
90
100
110
120
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Dec 14
Jan 15
Feb 15
Mar 15
Apr 15
May 15
Jun 15
US$/b
Managed money net long positions (RHS)
ICE Brent (LHS)
'000 Contracts
Source: IntercontinentalExchange, Inc.
8
OPEC Monthly Oil Market Report – July 2015