Q4 2021 Energy News and Market Insights

  • 8 Nov 2021
  • By CME Group

Crude Oil Weekly options finish Q3 2021 with second highest quarterly volume ever

Crude Oil Weekly options Q3 2021 average daily volume (ADV) reached almost 5K, with average daily open interest at 11,190 contracts – the highest since Q1 2020.

The crude oil marketplace has been volatile because of supply shortages due to reduced production capabilities. With oil-producing nations scheduling impromptu meetings to evaluate crude oil production, it is important traders have a tool to protect against a sudden impact to price risk.

Crude Oil Weekly options are designed to help traders hedge against event-driven risk over a weekend and into the week. Review this case study to see how Crude Oil Weekly options can be used to hedge adverse price movement.

Traders are preparing for a potentially volatile winter season

The winter trading season comprises the November through March contract months, which now have open interest of over 879K contracts ‒ the highest since 2017, the most active year ever for natural gas.

August, a traditionally slow month, is this year the most active August of all time for Natural Gas options trading, suggesting traders are expecting the US natural gas market to potentially have one of its most challenging winters in many years. Read about the factors driving these expectations.

Source: Powered by QuikStrike

Fuel from the field: Soybean oil and its energy uses

Legislation from both the US and EU is driving increased demand for biodiesel and renewable diesel, with both alternative fuels being derived from soybean oil. Last year, biodiesel accounted for 35% of US soybean oil use. Biodiesel is considered carbon-neutral because of the CO2 absorption during the process of growing the feed stocks, so demand is expected to continually increase ‒ placing pressure on soybean growers and crushers.

This increased demand has driven soybean oil prices to more than double in the past 12 months with Soybean Oil futures’ share of the soybean crush margin hitting its highest level in five years. Read more about soybean oil’s role within the renewable fuels market.

Source: USDA Oil Crops Yearbook

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All data is at October 26, 2021 unless stated otherwise

Over 5M Micro WTI Crude Oil futures contracts traded since launch

Since launching in July 2021, Micro WTI Crude Oil futures open interest has reached over 15K contracts with volume originating from 116 countries. On November 4, Micro WTI daily volume reached a new record of 151,131 contracts. At 1/10 the size of the benchmark WTI futures contract, Micro WTI Crude Oil futures offer the same robust transparency and price discovery of larger WTI futures with smaller margin requirements.

Successful deliveries of GEO and N-GEO futures

CBL N-GEO futures had their first successful delivery on Sept. 21, with 70 contracts (or 70K offsets) across seven clearing firms. Meanwhile, CBL GEO futures have successfully completed four delivery cycles with eight different clearing firms participating. YTD, CME Group has had nine unique clearing firms help facilitate deliveries across the two contracts, which have reached over 10K in open interest.

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