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Oil futures rack up record volumes

(Chart courtesy of optionsHOUSE )

Heavy trading continues in oil as a key OPEC meeting approaches.

Volume in CLF (Jan '16) Crude Oil Futures surpassed 500,000 contracts yesterday, the busiest session in the history of the contracts. They closed at $40.10, slightly below their previous record low from late August.

Every point represents $1,000 in client accounts, with an initial margin requirement of $5,060. Given yesterday's move, a trader successfully shorting the entire decline would have earned about 20 percent on his or her capital.

The drop came after the government's weekly inventory report showed that energy stockpiles continue to grow. A rally in the U.S. dollar, caused by a strong jobs report and weak European inflation, contributed as well.

Both catalysts may worsen in coming days. The supply glut could accelerate with the Organization of Petroleum Exporting Countries expected to keep production unchanged at tomorrow's meeting in Vienna. In addition, economists see the European Central Bank implementing monetary stimulus today, which in turn would keep pressure on the euro.

Traders will also watch the dollar, especially with more job numbers due tomorrow and the Federal Reserve apparently on track to raise interest rates on Dec. 16.

CL could see further downside if those events play out as anticipated. That makes yesterday's close especially important as a support level to watch.

For more information on futures, please visit The Futures Institute (Powered by CME Group) .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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