This week's global crude oil options market is very "busy". The last time this happened was in November last year, when it looked like a large producer to hedge.Oil priceFalling and buying a lot.
According toIntercontinental exchange(ICE Futures Europe exchange) data, the main trading in the market on Monday is the $60 put option, and the June, August and September options have a total contract worth 16 million barrels of crude oil. Bloomberg quoted people familiar with the matter as saying that the value of a contract-like transaction in the OTC market is equivalent to a contract change of more than 8 million barrels.
People familiar with the matter said that the buying boom on Tuesday continued, and the implied volatility of Brent crude's August $60 put option was also rising. According to exchange data, the volume of put options was the highest since November last year.
So far this week, Brent oil prices have continued to rise, rising more than 3%. It is currently approaching the $68 level.
In fact, oil prices have continued to rise since this year after experiencing a sharp fall last year. This was mainly due to OPEC's production cuts, US sanctions against Iran, and the domestic situation in Venezuela all exacerbating tight supply expectations.
Brokers and traders said that the recent surge in trading in the crude oil options market is likely to be related to a large hedge program. Considering the timing and scale of the transaction, some people point their finger at it.Brazilian oilCompany (Petroleo Brasiliero SA).
In a document submitted by Petrobras in 2018, the company hedged 128 million barrels of crude oil at an average price of $65 a barrel and implemented the protection in February and March of this year. The company announced its hedging plan for the first time last year and became one of the largest deals in the oil market.
Not only does Petrobras do this, Mexico also spent $1.2 billion last year to protect oil revenues in 2019 from falling oil prices.
In January of this year, the Mexican Ministry of Finance said that after buying a $1.23 billion put option, the country completed the oil hedging in 2019, which guaranteed that Mexican crude oil reached an average of $55 per barrel in 2019. This is the world's largest sovereign derivatives transaction.
Every year, Mexico trades its crude oil. Due to the size of the transaction, which is enough to affect oil prices, it is closely watched by the market. The plan is one of Mexico's long-term strategies to secure oil revenues in the face of market volatility.
On Sunday, Roberto Castello Branco, chief executive of Petrobras, said the company's best protection against the downturn in international markets was to reduce production costs. But the company is willing to continue using hedging tools to protect some products from price fluctuations.
“Because we do not expect the global economy to accelerate growth, oil demand will not accelerate, we need to prepare for the fall in oil prices.”
(Article source: Gold headline)