 "Traders raise bearish bets on crude oil")
There has been a sharp increase in the volume of trade and open interest (OI, unsettled contracts in futures trade) in the energy segment over the past six months on the Multi Commodity Exchange of India (MCX), due to a steep global fall in their prices.
The average trade volume of crude oil jumped 45 per cent to 207,628 lots in December from 143,671 lots in June; OI more than trebled in this period, to 43,089 lots from 13,938. In Natural gas, OI on the MCX has jumped to 12,376 lots from 8,329 six months earlier.
Normally, OI and volumes in futures rise in proportion to the volatility in prices of the underlying commodity. However, with crude oil and natural gas, the bears have taken control in both India and global exchanges, due to a steep fall in their prices.
“Crude oil tested Rs 2,462 a barrel on MCX and set a new low for the year, at a level not seen since early 2009. Opec’s (the petro exporting countries’ cartel) decision to not cut its production has shaken the market. So, many hedging their risks on MCX have rushed for selling, amid fear of a further price fall,” said Ajay Kedia, managing director, Kedia Commodity Research.
Brent crude oil in the spot market was $38.6 a barrel in London, down 8.7 per cent over a week and 14 per cent over a month, on weak demand and a supply glut.
American Petroleum Institute said on Tuesday that crude stocks fell by 1.9 million barrels last week, more than the expected 1.2 mn.
“Many Opec members will be incurring losses if the crude oil price falls further and would start cutting production, irrespective of the collective stand. So, the downside is limited in crude oil. Accordingly, traders on MCX are taking their positions, resulting in a sharp increase in volume and OI,” said Gnanasekar Thiagarajan, director, Commtrendz Research.
The world is awash with oil, having built record stockpiles in recent months. Slowing demand growth and resilient non-Opec supply could worsen the glut well into next year, said International Energy Agency’s latest monthly report. Stockpiles are at three billion barrels, an unprecedented buffer against geopolitical shocks or unexpected supply disruption.
World demand growth is forecast to ease closer to a long-term trend of 1.21 million barrels a day in 2016 from a very high 1.82 mbd this year. Despite the resilience of producers such as Russia, non-Opec supply is forecast to contract by at least 600,000 bpd next year.
The average trade volume of crude oil jumped 45 per cent to 207,628 lots in December from 143,671 lots in June; OI more than trebled in this period, to 43,089 lots from 13,938. In Natural gas, OI on the MCX has jumped to 12,376 lots from 8,329 six months earlier.
Normally, OI and volumes in futures rise in proportion to the volatility in prices of the underlying commodity. However, with crude oil and natural gas, the bears have taken control in both India and global exchanges, due to a steep fall in their prices.
“Crude oil tested Rs 2,462 a barrel on MCX and set a new low for the year, at a level not seen since early 2009. Opec’s (the petro exporting countries’ cartel) decision to not cut its production has shaken the market. So, many hedging their risks on MCX have rushed for selling, amid fear of a further price fall,” said Ajay Kedia, managing director, Kedia Commodity Research.
Brent crude oil in the spot market was $38.6 a barrel in London, down 8.7 per cent over a week and 14 per cent over a month, on weak demand and a supply glut.
American Petroleum Institute said on Tuesday that crude stocks fell by 1.9 million barrels last week, more than the expected 1.2 mn.
“Many Opec members will be incurring losses if the crude oil price falls further and would start cutting production, irrespective of the collective stand. So, the downside is limited in crude oil. Accordingly, traders on MCX are taking their positions, resulting in a sharp increase in volume and OI,” said Gnanasekar Thiagarajan, director, Commtrendz Research.
The world is awash with oil, having built record stockpiles in recent months. Slowing demand growth and resilient non-Opec supply could worsen the glut well into next year, said International Energy Agency’s latest monthly report. Stockpiles are at three billion barrels, an unprecedented buffer against geopolitical shocks or unexpected supply disruption.
World demand growth is forecast to ease closer to a long-term trend of 1.21 million barrels a day in 2016 from a very high 1.82 mbd this year. Despite the resilience of producers such as Russia, non-Opec supply is forecast to contract by at least 600,000 bpd next year.