Crude Oil Rollercoaster Drives Trading Volumes to All Time Highs

Crude oil has been the most volatile asset for months with trading volumes surpassing gold trading in Tokyo.

Crude oil futures have registered a back-to-back record month of trading activity on the Tokyo Commodities Exchange. After marking a record breaking 503,119 contracts in December 2015, the Dubai Crude Oil futures volume reached 703,313 contracts in January 2016.

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The figure comes merely a day after a wild rollercoaster ride in crude oil prices drove the crude oil markets haywire. After rallying close to 10 per cent in the aftermath of an announcement of prospective output cuts by major oil producers by 5 per cent, the price of WTI and Brent crude oil futures contracts dipped 6 per cent on the lack of any actual commitments.

The Tokyo Commodities Exchange (TOCOM) has added in its monthly volumes announcement that the Dubai crude oil January futures volume surpassed that of gold standard futures. This makes the contract the biggest among TOCOM listed commodities for the first time since it was launched in September 2001.

Oil prices are likely to continue to remain volatile in a market which is highly influenced by news headlines. While for short term traders this might provide a number of opportunities, a number of big players are remaining on the sidelines.

While volumes are high, the massive daily swings have dramatically changed the market conditions. This is why a number of brokerages have recently increased margin requirements on crude oil contracts in order to minimize their exposure to abrupt market moves.

At present, crude oil prices remain close to the multi-year lows registered at the beginning of January, however the bears have started to show signs of exhaustion.

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