Archive for the ‘trading’ Category

Just a second … hold that trading timestamp, please

The world’s next ‘leap second’ event will occur on June 30, 2015 — and, for the first time ever, according to the Futures Industry Association (FIA), it will happen “during active trading hours in an environment where electronic and automated trading relies on sub-second precision for communication, execution, clearing, surveillance and audit trails.”

Read the rest of this entry »

Guest post: A driving force behind the Low Carbon Fuel Standard sees credit prices rising

John Kingston is President of the McGraw Hill Financial Global Institute and Director of Global Market Insights. He continues to observe energy markets after his many years with Platts.

The price of Low Carbon Fuel Standard credits is going to rise. It’s just a question of when.

Read the rest of this entry »

Will US Gulf Coast gasoline trade ever see a $3 million deal again?

So what can you get these days for $3 million? Well, this apartmentOr 250,000 pairs of those khakis that Michigan football coach Jim Harbaugh loves so much. How about two islands due south of Brooklyn? (If you’re interested and your name is Mr. Moneybags from Monopoly, they are still for sale, a Realtor said this week.)

Here is where we pivot. It used to be that a $3 million deal for 25,000 barrels of Gulf Coast gasoline happened almost every trading day.

Read the rest of this entry »

The price of oil reaffirms the lesson of a legendary wager

John Kingston is President of the McGraw Hill Financial Global Institute and Director of Global Market Insights. He continues to observe energy markets after his many years with Platts.

When you look at a chart of the price of oil during the last six months, it says a lot of things. One of them is that Julian Simon has won again.

I’d long known about the legendary Julian Simon-Paul Ehrlich bet, made in the early 1980’s at the tail end of a commodity boom. What I didn’t know, until I recently stumbled upon an academic paper written by Yale professor Paul Sabin from 2013 that was turned into a book called The Bet, was how much the two of them truly despised each other. Why I thought the bet was sort of friendly is a mystery; it was actually part of a long-standing open hostility.

Read the rest of this entry »

Opportunities are strong in the European oil storage business

The room was pretty full for the first day of the Platts European Storage conference in Amsterdam this week, and it’s not surprising: the opportunities in this segment appear to be as strong as they’ve been for years.

Most important are three big factors: the market is in contango, which encourages storing crude and products; trade flows are changing, on the back of European refinery closures and the US shale revolution, requiring new storage facilities in some areas; and those refinery closures are providing opportunities for storage companies to buy the tanks and other facilities at the shuttered plants, and turn them into terminals.

Read the rest of this entry »

California’s cap-and-trade no more than road bump in gasoline’s steep price decline

Drivers in car-crazed California paid more than 10% more for their gasoline at the start of the year. They just didn’t realize it.

As expected, California’s introduction of the emissions cap-and-trade program for transportation fuel suppliers boosted Los Angeles regular gasoline rack prices nearly 17 cents in the first two days of 2015 to $1.5885/gal. The rack is the wholesale level where gasoline and diesel is moved onto those often-shiny tanker trucks that hold roughly 9,000 gallons.

What barely changed right away was the price up and down the supply chain.

Read the rest of this entry »

Indexology: A strong US dollar isn’t bad for all commodities

Jodie Gunzberg is the global  head of commodities for S&P Dow Jones Indices, which like Platts is part of McGraw Hill Financial. She writes on commodity investing on the Indexology blog. Her post from January 6, discussing the link between the US dollar the price of commodities, is reproduced here. 

A strong US dollar is generally bad news for commodities since historically as the US dollar strengthens, goods priced in dollars become more expensive for other currencies. The historical negative relationship between the US dollar and the S&P GSCI is shown below.

Read the rest of this entry »

Guest blog: Are low oil prices good or bad for oil traders?

Guest blogger Jonathan Kingsman is the founder of Kingsman SA, which is now a unit of Platts, and he remains a Platts consultant.

Are low oil prices good or bad for oil traders?

In theory oil traders should not care about the price of oil; as they have reminded us many times recently, the big trading companies trade differentials and spreads, not flat (outright) price.

In a trader’s ideal world oil prices would fluctuate in a range, giving traders just enough volatility for risk-free plays on shipment dates and tonnages.

Read the rest of this entry »

The plunging US Gulf Coast diesel market

It has been a wild ride for the US Gulf Coast diesel market, driven by oversupply and tax considerations in just the last two weeks.

The longer-term market is reflecting that glut, because the NYMEX ULSD contract is in a relatively steep contango of 10 cts/gal out over the next year. But in the short-term, it’s been the physical Gulf Coast market that’s been the most interesting.

Read the rest of this entry »

The diverging paths of gold and oil in 2014

Gold is a commodity that in the real world doesn’t get used for a whole lot of truly important things, but is seen as a financial asset, and always has been.

Oil is a commodity that in the real world makes modern life possible, gets used for many, many important things, and yet is also seen as a financial asset. It hasn’t always been as that last descriptor, but it’s been that way for awhile.

In the past year, the fundamentals of the industrial asset–oil–ripped through the market in the last few months of the year and sent the price of that commodity plunging. And during that same year, the so-called “safe haven” of gold actually turned out to be something like that in the face of global upheaval, after an extremely bearish 2013. The metal’s price basically didn’t do much of anything over the course of the year.

Read the rest of this entry »