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Commodity exchanges reap benefits from deepening energy glut

Commodity exchanges reap benefits from deepening energy glutAs the panic in the energy market grows fondly due to the glut in oil production, exchange operators are reaping the benefits as the trading volume continued to soar high. Commodity exchanges reported a high volume jump gaining more than what is forecasted.

Reuters reported on Thursday, February 04, that two of the largest commodity exchanges, CME Group Inc and Intercontinental Exchange, are showing data that crude oil volumes jump some 40 percent and 14 percent respectively in 2015. Furthering of high records is continued until January of this year, as per data released this week, as a result of whipsawing prices which gains interest from retail and speculative investors. These volumes is expected to be a hot topic as the Atlanta-based ICE will report their quarterly earnings on Thursday while their Chicago rivals will release on Friday. This advantage can help stabilize slow turnover growth in interest rate contracts.

January data shows ICE’s Brent contract gained over 23 million futures and options traded in the month, which is 45 percent higher from its December records and almost a quarter from a year ago, exceeding over 4.5 million contracts from the previous monthly record set.
At the same time, CME’s U.S. WTI crude contract sealed some 26.2 million contracts which is equivalent to 26.2 billion barrels of oil. The sealed contract jumped up almost 30 percent from a year ago and a jump of nearly a quarter from last month.

Coming from an expert’s mouth, analyst at Sandler O’Neill & Partners Richard Repetto said the volumes produced by the CME and ICE are running at more than 30 percent and 15 percent ahead of its annual forecast respectively.

The gains in the energy market can also be felt in other energy products such as gasoline contracts and natural gas futures contracts. Data shows that gasoline contracts increased 10 percent from last year to 3.4 million contracts making it the highest since 2008. At the same time, natural gas futures contracts reached a record above 2.1 million in the month.

The month of January is considered to be wild by crude oil investors. However, to some commodity-based entities, the rout in oil prices has become their advantage to gain high in the energy market.

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