oil trading [697d1841]

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

1. Ticker Strategy

1.1. Futures

1.1.1. Regular Futures

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

1.1.2. Active Tickers

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

1.1.3. Generic or Rolling Tickers

• "Root Ticker" + "1"
• "CL1" - Front of the month

2. 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"