(Screen shot courtesy of optionsHOUSE )
Oil traders are moving forward by a month as expiration approaches.
CLF (Jan '16) Crude Oil Futures traded 255,000 contracts yesterday, almost as many as CLZ15 (Dec '15) . Volume will continue to increase in the longer-dated futures into Friday, while activity will dwindle in the Decembers. The process will repeat itself next month later as traders move to February.
Aside from their expiry dates, the contracts are very similar. Both let traders control 1,000 barrels of oil with just $5,060 of initial margin. That means every $1 in the price of crude translates into $1,000 in the accounts of clients who position correctly. The contracts are change hands virtually around the clock as well with penny-wide bid/ask spreads. That makes them more liquid and easier to trade than competing equity-based products like the U.S. Oil Fund (USO).
Crude has been sitting near long-term lows amid a glut in production and tepid global growth. Upcoming events that could impact prices include Energy Department inventory data on Wednesday mornings and the Organization of Petroleum Exporting Countries' meeting on Dec. 4.
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