After the OPEC+postponed meeting, international oil options trading took a sharp turn and turned sharply bearish.
According to ICE Futures Europe, approximately 211000 Brent crude oil put options were traded on Wednesday, marking the largest daily trading volume in history. In addition, the trading volume gap between them and call options has also set a record high since 2020.
On Wednesday (November 22nd) local time, OPEC announced a four day postponement of the meeting originally scheduled for November 26th. The industry has stated that the dispute among oil producing countries over production cuts may be the main reason for the postponement of the meeting. On the same day, the international benchmark Brent crude oil futures price fell by more than 4%, narrowly missing the $80 mark.
Price fluctuations have prompted some traders to seek protection against the risk of a significant drop in oil prices if OPEC fails to reach an agreement. Due to the surge in demand for put options, traders are paying the largest option fee since April to hedge against the risk of price declines.
Earlier in the day, OPEC released a statement on its official website that the 187th OPEC Conference, 51st Joint Ministerial Supervisory Committee (JMMC) meeting, and 36th OPEC and Non OPEC Oil Producing Countries Ministerial Conference (ONOMM), originally scheduled to be held offline next Thursday, November 30, 2023, will be changed to online meetings.
Previously, media outlets revealed that Saudi Arabia was working hard to persuade Angola and Nigeria to accept lower production targets, and even rumored that "Angola is considering leaving the organization". On Thursday, Angola's OPEC board of directors explicitly emphasized that the country currently has "no idea in that direction".
Not long before the press release, the Nigerian OPEC Council also stated that "I am not aware of the internal differences within OPEC+, but I am seeking unity." However, analyst Tamas Varga from PVM Oil Associates stated that whether to comply with OPEC's production quotas is a major challenge for oil producing countries, as many countries have motives for non-compliance.
According to data released by the US Energy Information Administration (EIA) on Wednesday, crude oil production in the United States is expected to reach 13.2 million barrels per day, an increase of 1.1 million barrels per day compared to the same period last year, reaching a historic high. This change undermines the efforts of countries such as Saudi Arabia to voluntarily reduce production and drive up oil prices.
As of yesterday's close, the US WTI crude oil futures price has dropped to $77.1 per barrel. John Kilduff, an oil analyst at Again Capital, told the media that in the future, US oil prices may test $70 per barrel and continue to explore the low of $60 per barrel, "especially if there is a warm winter in the northern hemisphere
However, most analysts expect the OPEC+side to also take corresponding measures - further reducing production to stabilize oil prices. Analysts point out that there is a high probability that the OPEC+meeting will ultimately be reached, and oil prices will also stabilize and bottom out from their current position. The probability of subsequent volatility is relatively strong, returning to the $80 to $85 range.
Earlier this year, the Saudi Energy Minister repeatedly emphasized that speculators in the market will continue to exist, and speculators will feel pain and need to be careful.