Oil markets experience record boost

The world oil markets have experienced an unprecedented boom.

According to Bloomberg, as of February 2nd the number of long and short positions opened by traders reached a record level since 2006 when such statistics in general began to be recorded by the Commodity Futures Trading Commission (CFTC).

At the same time, trading is directed in different ways. Those who believe that oil prices will go down, as well as those who consider that they will increase, are showing unprecedented activity.

"The situation reflects the confidence of both sides. We see the main battle between those who believe that the bottom has already been reached and those who believe that (oil) can fall still further,'' Again Capital cites John Kildafa, the partner of the New York hedge fund.

According to the CFTC, the number of short contracts increased by 9.7% during the week that ended on February 2nd, 2016, and even close to the absolute maximum reached in January 2016. The number of long contracts, the owners of which forecast that oil prices will rise, also grew, but not so rapidly.

"It's a difference of opinions how the market will move,'' an analyst of the energy market of the New York-based Citi Futures Perspective Tim Evans said.

He explains that such a high activity of those who stick to a fall in prices is due to an increase of oil reserves in the United States. According to the US Energy Information Administration (EIA), on January 29th 2016 they exceeded 500 million barrels. Nobody expected that oil reserves could reach their highest level since 1930. 

Associate professor of the department of state regulation of the economy, the deputy head of the department of state regulation of the economy on educational work at the Institute of Public Administration and Management (IGSU) RANHiGS Ivan Kapitonov noted in a conversation with a correspondent of Vestnik Kavkaza now "the oil and gas market is divided into financial and physical markets."

"We see a very serious volatility in oil prices in the financial market, which allows us to receive super-profits. And the more positions are opened now, the greater the potential profit can be extracted by investors. Thus, we understand that volatility will increase, not all investors are ready for it,'' he said.

According to experts, what the current situation "is not tied with the real ratio of demand and supply, moreover, 98% of the transactions that occur in the financial markets won't lead to real purchase of goods." "We should also understand it," Kapitonov said.

Senior analyst of the National Energy Security Foundation Igor Yushkov disagreed with the conclusions in article published by Bloomberg.

"I consider that what is happening in the market shows that investors don't invest in the tool of futures. On the contrary they are coming out of it. The fact that they bought a record number of futures, it is a record in the history, rather during to the last few months. When the Americans announced that curtail its program of quantitative easing and raise the refinancing rate, the Fed announced about increase of rates, the dollars of companies will become more expensive and it will be harder to receive them. Players started selling futures and thereby obtain dollars,'' he said.