Oil and fuel futures and options contracts traded on Monday hit an all-time high as traders rushed to lock in surging benchmark prices, Reuters has reported, citing ICE data.
The total number of futures and options in crude and fuels reached 12.7 million, with the number of contracts for ICE’s Low Sulphur Gasoil hitting 1.3 million—the highest ever. The ICE contract is the global benchmark for all refined oil products.
Brent crude and West Texas Intermediate futures and options traded on March 1, meanwhile, stood at 4.8 million. On Monday, Brent crude contracts went up by 11% and WTI contracts added 8% to reflect heightened supply risk from the war in the Middle East, as U.S. oil producers sought to lock in the higher prices.
“We had a queue of oil producers and also a set of dealers ready to trade at 5 p.m. on Sunday, anticipating a price increase. It was standby, everybody’s ready, finger on the button, let’s get going,” said the president of Aegis Hedging, Matt Marshall, as quoted by Reuters. The firm, according to the publication, handles between 25% and 30% of U.S. oil hedging.
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Brent crude has gone up to over $83 per barrel, as of the time of writing, with West Texas Intermediate at close to $76 per barrel, after Iran threatened to attack any tanker attempting to enter the Strait of Hormuz. Media are meanwhile reporting that Iraq has begun to shut in production for lack of storage space and Kuwait will soon have to start doing the same if the war extends beyond one week.
In response to Iranian threats of attacks on tankers, and as insurers cancel coverage, president Trump has offered U.S. insurance from the Development Finance Corporation for tankers loading in the Middle East, along with U.S. Navy escort “if necessary”.
By Irina Slav for Oilprice.com
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