Wednesday, October 28, 2009
Tuesday, October 27, 2009
CFTC Chairman Gensler's remarks to the Natural Gas Roundtable Luncheon
CFTC Chairman Gary Gensler delivered remarks at the Natural Gas Roundtable Luncheon earlier today. He summarized the current regulatory reform proposals pending in the U.S. House of Representatives by saying the following:
The full text of his remarks is available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/opagensler-16.pdf
Both of the committees’ bills include three important elements of regulatory reform: First, they require swap dealers and major swap participants to register and come under comprehensive regulation. This includes capital standards, margin requirements, business conduct standards and recordkeeping and reporting requirements. Second, the bills require that dealers and major swap participants bring their clearable swaps into central clearinghouses. Third, they require dealers and major swap participants to use transparent trading venues for their clearable swaps and provide the CFTC with authority to impose position limits in the OTC derivatives markets.
The full text of his remarks is available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/opagensler-16.pdf
Wednesday, October 21, 2009
Tuesday, October 20, 2009
Friday, October 16, 2009
Market Commentary
Energies finished on the highs this week, following a week of bullish stats and a weakening USD. Refinery runs were particularly bullish for products with surprise RB draw of 5.1 MN bbls and a 4% decrease in capacity utilization. We note however that distillate inventories remain at decade highs and global mid distillate inventories remain high across the board. This likely keeps refining margins under pressure for some time to come.
The other big story of the week was the falling volatility in crude options. In a rising market, we often see volatility decrease. This was not the case last week when it was rumored that a larger player was buying longer-dated positions and keeping the options market firm. In the absence of this buyer, volatility trimmed 7% this week with a slight increase to the call skew. With this in mind, we suggest that short hedgers buy puts as an alternative to short futures strategies.
Examples: November WTI Asian $75.00 put is $2.00, OR consider the costless $75.00 put vs the $82.50 Call as a collar.
Natural gas note: Fundamentals remain bearish despite some near term cold. The Friday rally was another reminder of the unpredictability of the NG market. Despite the rally, the Nov-Dec spread went out to -$0.936, a bearish indication.
The other big story of the week was the falling volatility in crude options. In a rising market, we often see volatility decrease. This was not the case last week when it was rumored that a larger player was buying longer-dated positions and keeping the options market firm. In the absence of this buyer, volatility trimmed 7% this week with a slight increase to the call skew. With this in mind, we suggest that short hedgers buy puts as an alternative to short futures strategies.
Examples: November WTI Asian $75.00 put is $2.00, OR consider the costless $75.00 put vs the $82.50 Call as a collar.
Natural gas note: Fundamentals remain bearish despite some near term cold. The Friday rally was another reminder of the unpredictability of the NG market. Despite the rally, the Nov-Dec spread went out to -$0.936, a bearish indication.
Thursday, October 15, 2009
Tuesday, October 13, 2009
Monday, October 12, 2009
Effect of Columbus Day bank holiday on U.S. Energy Markets
Due to the Columbus Day bank holiday API statistics will be released on Wednesday, October 14th (4:30 PM EDT) while DOE statistics for petroleum and natural gas will be released on Thursday, October 15th (10:30 AM EDT for natural gas, 11:00 AM EDT for petroleum). NYMEX markets are operating normally today.
Thursday, October 8, 2009
Tuesday, October 6, 2009
Monday, October 5, 2009
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