Implied range is Front 12 months and then M and Z for additional 24 months, so 36 months in total. So right now the 1 months that are implied are z8fg9 thru uvx9, the 3 months are z8h9m9 thru kqx9 (so muz9 is not implied) and for the 6 months z8mz9 thru mz0m1. Anything outside of those ranges probably shows no market at all and will require an autospreader. Most of those flys are 1 tick wide but don't trade that much. So charts will look a little empty. If your using TT though I think you can plot bid and ask instead of last trade. That should give you a better chart.

Kemp/Reuters :- U.S. oil output surges but growth likely to moderate in 2019: John Kemp
https://www.reuters.com/article/us-oil-prices-kemp/u-s-oil-output-surges-but-growth-likely-to-moderate-in-2019-john-kemp-idUSKCN1N64YM

Crude and condensates output hit a record 11.35 million barrels per day in August, up from 10.93 million bpd in July ...

Crude output has increased by more than 2 million barrels per day over the past 12 months ...

In percentage terms, output is up by nearly 25 percent over the last year, the fastest increase since the 1950s

I think we are at the buy point here with an 19% correction inside 5 weeks to test channel support from 2017 lows

More to it than this of course but the technical is a big part

Massive curve move last few days. I know many of you probably looked at crude today and said, "Hmm -54c, okay got it". But did you look at the back? Dec 22 was UP $2.78 today. The Dec18/Dec22 spread has moved just under $5 in the last two days. Since the early October highs Dec18 crude is down over $15/bbl but Dec23 is down less than $1 and is up over $5 from the June Highs!

Don't have much time today, but here's a quick chart ....

Updated chart after today's big move

Was reading an FT article and there is the following quote in it:

Quoting 

https://www.ft.com/content/5ae10408-e736-11e8-8a85-04b8afea6ea3 “When you put all these ingredients together you have a recipe that’s not really conducive to an $85 market environment,” said Michael Cohen, oil analyst at Barclays. Options on WTI for December delivery are due to settle on Wednesday and large positions remained outstanding for put options conferring the right to sell WTI at $55 a barrel. That gave holders an incentive on Tuesday to drive futures towards that price, and forced options sellers to take short positions to hedge their exposure. “What you end up with is monster hedging risk,” said Douglas Hepworth of Gresham Investment Management, a commodities fund manager.

I cant get my head around this? If its true, then i'm assuming the people who originally bought the Put options must have some serious wedge to put on enough short positions to drive the price down, or is there another means they could drive prices down, assuming whats in the quote is correct?

Thanks

FrazMann 

I cant get my head around this? If its true, then i'm assuming the people who originally bought the Put options must have some serious wedge to put on enough short positions to drive the price down, or is there another means they could drive prices down, assuming whats in the quote is correct?

The idea is that the large swap dealers have sold put options to large producers including Pemex ( Uncovering the Secret History of Wall Street’s Largest Oil Trade ). There are many ways they could hedge these, including buying similalir options from other traders/market makers but ultimately these options are sat in somebodies book somewhere and that person has to manage the risk associated with them. The two most common ways to manage them is a) do nothing, aka the "It ain't ever going there" strategy or b) delta hedging. Delta is the option greek that tells you how much you should expect an option price to move as a percentage of the outright/futures price move. (A long Call has a positive delta, a long Put has a negative delta) The concept of delta hedging is that you sum up the delta's of all the options in your book, and then buy or sell futures so that your portfolio has no price risk. The problem is there is also something called gamma. Gamma is the option greek that tells you how much you should expect an option DELTA to move as the futures price move (long options have positive gamma, short options have negative gamma). So as prices go down, the delta of put options increase. If your long the put (ie have negative delta and long gamma) this is good for you. If your short this is bad. So a trader who had sold a lot of these $55 Puts was looking really good a few weeks ago. The options were $20 out of the money, and their delta's would be almost zero, so if they were delta hedging they would only be short a few futures against them. Then as prices drop, delta increases and he needs to sell more futures to hedge the higher delta. With prices at $57 the delta on $55 puts would be close to 50% so a delta hedging trader short $55 puts would need to be also short 1 future for every 2 options he has.

So in summary people are speculating that traders delta hedging short put positions have been caught in a 'death spiral' selling futures and forcing the price ever lower, which in turn causes them to sell even more futures.

Thank you very much for taking the time to explain that .

I'm curious, do you agree with the quote or do you think it had more to do with the US granting those 8 countries temporary exemptions from the Iran oil sanctions, while OPEC+ had Inc production to cover the potential shortfall?

Sent from my CLT-L09 using Tapatalk

I think they were all factors. Was one or the other, or something else the bigger driving factor? Who knows.

WSJ :- Oil Hedge Fund Giant Hammered in Crude’s Slide
https://www.wsj.com/articles/oil-hedge-fund-giant-hammered-in-crudes-slide-1542292021
(May require subscription)

Pierre Andurand, who earlier in 2018 predicted oil could soon hit $100 a barrel, suffered the largest-ever monthly loss of his flagship fund in October. The $1 billion Andurand Commodities Fund lost 20.9% last month, taking the fund down more than 12% for the year

and

Oil prices took a plunge Tuesday, with U.S. crude sliding 7.1%, its steepest fall in over three years. That led to market speculation that a large hedge fund had got into trouble, with some pointing the finger at Mr. Andurand’s fund.

“It was nothing to do with us,” Mr. Andurand told The Wall Street Journal on Wednesday. “I do not think the move is related to large funds in trouble.”