TOCOM, CME Report Record-High Oil Trade Volumes This Week

Persistent oversupply, OPEC's market share preservation policy boosts trade

The Tokyo Commodities Exchange (TOCOM) processed record-high trading volumes in Dubai crude futures this week, with open interest also at unprecedented levels.

TOCOM reported 55,388 contracts on December 8, the first time the amount of traded volume exceeded 50,000 contracts, and the highest amount since the contract started trading on the exchange in September 2001.

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All-Time Volume Highs

Open interest in Dubai crude futures today reached 72,093 contracts, improving the record set yesterday, when the open interest climbed up to 62,967 contracts, TOCOM said.

The Japanese bourse is not the only one reporting record trading volumes in crude, following OPEC’s meeting last week when the organization decided to maintain its “pump till you drop” policy in order to preserve market share. Nobody was surprised by their decision but it did deepen the rout, caused by a persistent oversupply and demand that it continuously fails to catch up with.

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Price Rout Pushes up Volumes around the World

CME Group, the global derivatives exchange, also reported record-high volumes for NYMEX futures and options for West Texas Intermediate (WTI), the US benchmark, on Tuesday. The number of trades processed came in at 1.841 million, versus the previous record of 1.772 million contracts, which was registered on August 31 – August saw multi-year lows in crude oil as well.

Intercontinental Exchange’s (ICE) Singapore unit also reported a new record in the niche, this time in Brent crude (the international benchmark) mini contacts for December 9. ICE said in a press release that the volume of trades totaled 14,188 contracts. This may not sound like a lot, unless you factor in the date when this contract was launched on ICE Singapore: November 17. From that date to December 9, the total traded volume in Brent mini futures reached 88, 067.

Seven-Year Price Lows, No Light at the End of the Tunnel

The two most popular benchmarks, Brent and WTI, are at seven-year lows, with WTI settling at $36.76 a barrel yesterday, and Brent crude ending up below $40 for the first time since February 2009, at around $38.70. At 3.30 GMT today, Brent was trading at $38.56 a barrel, and WTI was changing hands at $35.91, according to data from Nasdaq.

Oil at $20?

In September, Goldman Sachs issued a note in which it warned that WTI could drop as far down as $20 a barrel. This came as a slap in the face of optimists who had kindled hopes that oil would start recovering before this year’s end. And Goldman is not alone in this.

Moody’s also cut its oil price forecast for 2016, in October, expecting the average for Brent at $53 and the average for WTI at $48, figures that might even look too optimistic, after the International Energy Agency said demand for the commodity would grow more slowly than previously expected. The IEA also cautioned that the glut would continue into 2016.

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