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Oil... interesting situation right now

  • #1
  • First Post: Dec 23, 2015 5:47am Dec 23, 2015 5:47am
What a crazy year for oil, everybody know..

Well, it's almost christmas time, and the premium between USOil and UKOil went negative just from a few days.

What i mean, the spread between the two, the price-difference, it usually fluctuate between 2-3usd (200-300 pips), the UKOil is a few dollars more expensive than the USOil.

Anyway, now that the USOil is slightly more expensive than UKOil, it is indeed a great arbitraging opportunity, in other words, BUY UKOil and SELL USOil, the trade is low-risk di per se as we don't care what the oil will do, it is somehow hedged.
Plus, in a few days there are 200-300 pips to be done, and with a good leverage it can be something.

Just wanted to share this trading idea as a merry christmas!

Image below.
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  • #2
  • Dec 23, 2015 5:55am Dec 23, 2015 5:55am
Just to make it clear, of course make your own judgement and thoughts, nothing is ALWAYS as easy as it looks like.

It's true, from 2011 (end of 2010) untill now, the UKOil price has beel almost always higher than the USOil price of a few Usd, however from 1988 (and before) untill the end of 2010, the USOil was slightly more expensive than the UK one, so...

Who knows what's going to happen next?

Take care!
  • #3
  • Dec 29, 2015 3:49am Dec 29, 2015 3:49am
Quoting tunera
What a crazy year for oil, everybody know.. Well, it's almost christmas time, and the premium between USOil and UKOil went negative just from a few days. What i mean, the spread between the two, the price-difference, it usually fluctuate between 2-3usd (200-300 pips), the UKOil is a few dollars more expensive than the USOil. Anyway, now that the USOil is slightly more expensive than UKOil, it is indeed a great arbitraging opportunity, in other words, BUY UKOil and SELL USOil, the trade is low-risk di per se as we don't care what the oil will do,...
HI Bro,
I interested about oil and commodity, can you explain to me briefly about oil, and connection oil with dollar?
thanks bro
we don't predict, we only ride
  • #4
  • Jan 8, 2016 6:28pm Jan 8, 2016 6:28pm
I am long the Brent/WTI spread because it's at a 5 year low.
  • #5
  • Feb 11, 2016 2:19pm Feb 11, 2016 2:19pm
So.. at the start of this thread, the interesting situation was a spread of 0..!
Today, the spread is of around 400pips.

Seems like another opportunity.
  • #6
  • Feb 11, 2016 2:20pm Feb 11, 2016 2:20pm
Quoting tunera
So.. at the start of this thread, the interesting situation was a spread of 0..! Today, the spread is of around 400pips. Seems like another opportunity.
To put it clear:

Buy US Oil
Sell UK Oil

Same size.

Close when 200-300 pips profit are shown.
  • #7
  • Feb 12, 2016 7:27am Feb 12, 2016 7:27am
Quoting tunera
{quote} To put it clear: Buy US Oil Sell UK Oil Same size. Close when 200-300 pips profit are shown.
Change of plan, i just closed my positions.

So.. below there is the spread chart (The chart that show the difference between UKOil and USOil).

It's a daily chart.
As we can see, it was making sense to buy the spread expecting a bounce, however selling it expecting to come back to 0 may be another story in terms of risk, as we can see in the chart there is the possibility for it to go up at 10-20 level (that would mean a 1000-2000 pips potential loss on the trade), absolutely crap.

So, let's forget about this trade, and if you're in it, just be careful!
Personally i'm out.
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  • #8
  • Feb 22, 2016 8:43am Feb 22, 2016 8:43am
Quoting tunera
{quote} So, let's forget about this trade, and if you're in it, just be careful! Personally i'm out. {image}
I liked this trade and know a few who were doing something similar.
The volatility is insane right now and the contract differences are proving some arbitrage opportunists not seen in a long time.
Your initial R:R was screaming to take this at first, I'm on the lookout for trades like this all the time.
Cudos
  • #9
  • Feb 22, 2016 9:19am Feb 22, 2016 9:19am
Quoting Sonofsin5
{quote} I liked this trade and know a few who were doing something similar. The volatility is insane right now and the contract differences are proving some arbitrage opportunists not seen in a long time. Your initial R:R was screaming to take this at first, I'm on the lookout for trades like this all the time. Cudos
Yes it seems to have played out quite well, 300pips gain.

The spread is now 1usd, too bad i didn't profited from this!

Oh well..
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  • #10
  • Feb 29, 2016 6:24am Feb 29, 2016 6:24am
Anyone with fundamentalistic view on crude oil, IEA reports are telling that demand for crude oil gonna rise on 2016. while Saudia Arabia denies for production and stayes as the lion with the den. Non OPEC Ministers are meeting again on mid march, Do you thinnk they will find some way out???. We are over over supplied, slitght rise in demand wont led to equilibrium. Yeah going ahead if OPEC agrees for lower frezze and a good production cut, which natural rise in demand. we can expect some positive move to come ahead.
Please add if anyone have any intresting joints to the topic.
Thanks
  • #11
  • Feb 29, 2016 9:02am Feb 29, 2016 9:02am
sure, im vote buy for long time
onorebate
  • #12
  • Mar 8, 2016 6:34am Mar 8, 2016 6:34am
Quoting neeshamjames
Anyone with fundamentalistic view on crude oil, IEA reports are telling that demand for crude oil gonna rise on 2016. while Saudia Arabia denies for production and stayes as the lion with the den. Non OPEC Ministers are meeting again on mid march, Do you thinnk they will find some way out???. We are over over supplied, slitght rise in demand wont led to equilibrium. Yeah going ahead if OPEC agrees for lower frezze and a good production cut, which natural rise in demand. we can expect some positive move to come ahead. Please add if anyone have any...
Things seem to change now my friend! The talks are now taking actual shape now with Saudi Arabia agreeing to go for production cut. Prices have already broken $35 resistance which now acts as a support. I guess the meeting will surely bring out a result this time because now price is bound to rise only. Short positions on crude oil has declined now whcih suggest bullish sentiment on crude oil. Go long is my view!! All the best!!
  • #13
  • Mar 18, 2016 11:49am Mar 18, 2016 11:49am
I am playing with Brent/wti spread right now and there is something i can't see.​

Sell 157 WTI (5000 ) at 39,7

Buy 137 Brent (5000 ) at 41,2

Oanda pays you 11,5 € / day interest on WTI short and charges -2,9 € /day on Brent long , so you net 8,6 € /day --> or 3139 € /year

Every dollar arbitraje goes against you is a -2,5 % or - 125 € so at the end of the year you need a 25 $ spread against you to lose money.

If arbitraje goes in your favor you win 3100 € + spread.

Too easy to be true, ¿Am I missing something?, why are so diferent wti/Brent interest?
  • #14
  • Mar 21, 2016 8:39am Mar 21, 2016 8:39am
Here we go again!

Spread uf ukoil and usoil again around 0.

300-400 pips trade opportunity?

I got my margin busy with some fx trade, but when i close them if oil still offer such opportunity i may go for it.

Anyone like this?
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  • #15
  • Mar 21, 2016 1:16pm Mar 21, 2016 1:16pm
Quoting tunera
Here we go again! Spread uf ukoil and usoil again around 0. 300-400 pips trade opportunity? I got my margin busy with some fx trade, but when i close them if oil still offer such opportunity i may go for it. Anyone like this? {image}
I'm in.

The trade:
- Buy UKOil
- Sell USOil

Will post an update when i'll close it.
  • #16
  • Mar 24, 2016 11:49am Mar 24, 2016 11:49am
Quoting tunera
{quote} I'm in. The trade: - Buy UKOil - Sell USOil Will post an update when i'll close it.
Today the spread is again at around 100pips, this mean if u bought ukoil and sold usoil at the time of my last post, you got your 100pips easy and without* risk.

*who knows!?

  • #17
  • Last Post: Mar 26, 2016 5:19pm Mar 26, 2016 5:19pm
That's clever, never knew about this. Is there anywhere other than Fxcm I can view the spread chart? This is great, is there any other instruments where the same thing happens?
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