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Trade Alert: WTI/BRENT Oil Price Spread Widening

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For traders interested in CFD and futures trading in the commodities market, there is an interesting anomaly in the market right now, as prices of WTI and Brent Crude oil have moved further and further apart over the past week or so.

Below is a chart showing the price of Brent (in blue) and WTI (in red):

WTI/BRENT spread

WTI typically trades at a discount to Brent due to the slightly “lower quality” of the oil. While this is something we have seen for years, the price of the two oil blends usually tracks each other pretty closely.

On May 24, this relationship started to break up with a strong sell-off in the market for American WTI oil, most likely due to profit-taking by a very large number of traders who were long on WTI oil.

The price spread we are seeing right now is highly unusual in the oil market, as is also evident in the chart above. The chart shows the price over a period of about 12 months.

One explanation I have seen for this phenomena is that oil traders have become increasingly optimistic about the market as the price of oil has been making new highs over the past weeks and months. With prices reaching about $70 per barrel for WTI and $80 per barrel for Brent, nearly all market participants had turned bullish on oil.

Oil companies saw the higher prices as an opportunity to reduce their inventories, and oil traders happily bought up all the oil that came to the market in hopes of riding the trend further up. This lasted until there were no more buyers left in the market to buy up the oil that oil companies were looking to sell, and prices on US WTI oil in particular, plummeted.

As a result, we now have the largest recorded price spread between WTI and Brent since 2015.

The price gap as of this writing is more than $10, while a “normal” price difference over the past year has been around $3 to $4.

A good way to trade this would be to use CFDs, or trade directly in the futures market for those who have access to that, and place a long trade on WTI while going short BRENT with an equal amount. Due to the very rare occurrence of a spread this large, it is highly likely that this price gap will be narrowing over the next 1-3 weeks.

Featured image from Pixabay.

Disclaimer: The above content is for informational purposes only and should not be considered as investment advice.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Winklevoss Bitcoin Exchange Eyes UK Expansion: Report

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After being snubbed by U.S. regulators, Gemini exchange, which was founded by Cameron and Tyler Winklevoss, have set their sights across the pond. According to the Financial Times, the twins are eying an expansion into the U.K. market even as other blockchain startups have left Canary Wharf amid this year’s market struggles. According to sources cited in the FT, Gemini has already engaged a consultant about the potential expansion and is readying an application with UK regulators.

Their decision to pursue a UK expansion with the bitcoin price still a far cry from its peak is a sign of confidence in a market where institutional interest has seemingly reached a tipping point.

Founded more than four years ago by the Winklevoss twins, Gemini’s trading volume is currently hovering at $16 million. A UK expansion would pit it against U.S. rival Coinbase, both of which offer custody solutions and both of which target institutional investors. Coinbase recently unveiled a feature that gives British investors the ability to buy crypto with the GBP.

Meanwhile, U.S. regulators have been throwing shade at cryptocurrency exchanges, with the SEC having rejected the Gemini bitcoin ETF not once but twice as the regulator struggles to get a grip on the industry. In New York, where Gemini holds a BitLicense, the attorney general’s office released a scathing report of crypto exchanges, suggesting they’re not doing enough to combat “manipulation” and “conflicts of interest.”

Gemini has been proactive about blocking these activities, as evidenced by its partnership with Nasdaq to weed out possible abuse. It’s also had the regulatory wind at its back with the approval of its new stablecoin, the Gemini Dollar, which is pegged to the U.S. dollar.

The Winklevoss twins would be entering UK territory where the nascent crypto industry is viewed as a “Wild West,” with lawmakers spewing concerns of fraud and investor protection.

Canary Wharf

While it’s unclear where Gemini exchange would lease office space, Canary Wharf has attracted hundreds of blockchain startups since year-end 2017. Since that time, however, many have left amid the market downdraft, leaving players like crypto brokerage BCB Group standing.  BCB Group Founder Oliver von Landsberg-Sadie told the FT it’s not uncommon to “see a whole vacant area where there was once a flourishing team.”

Distributed workspace startup Primalbase, which is behind the PBT tokens and which Forbes described as a “tech ecosystem,” will make its UK debut on Oct. 4. The office space is designed for fintech firms.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 62 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Japanese Cryptocurrency Exchange Zaif Suffers $59 Million Hack

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The Japanese cryptocurrency exchange Zaif was reportedly hacked for almost $59,000,000. This is not the first time the exchange has struggled with vulnerabilities or technical flaws in its system.

The most notable example of this history occurred back in February when a system glitch enabled customers to buy cryptocurrency for free. At the time, users of the exchange complained about the sites poor backend performance and a general lack of support throughout the whole ordeal.

Unlike this former glitch, this hack could prove to be a much larger issue for Zaif and could potentially lead to its shutdown. This is mainly due to the fact that Japanese regulators have significantly heightened their overall scrutiny of domestic exchanges since Coincheck was hacked for $530,000,000.

The Zaif hack occurred on Sept. 14 but was apparently not discovered until Sept. 17. The hackers managed to steal various amounts of Bitcoin, Bitcoin Cash, and Monacoin from the exchange’s hot wallet, which was collectively worth about 6.7 billion yen (or just under $60 million).

Zaif has stated however that the efforts to re-enable deposits and withdrawals by are already well underway. The exchange has also reported the hack to the Japanese Treasury Department (who are ostensibly already investigating the incident)

Zaif also claims to have already made damages declaration to the relevant authorities. An official statement put out by the exchange said, “Currently, we are checking and strengthening security and rebuilding the server in order to restart the system.”

Zaif has additionally notified Japan’s Financial Services Agency, as well as invited a third-party investigation firm known as the Kaichi Corporation to review possible causes of the hack and to trace the steps the hackers took to carry it out.

The most concrete step that they have taken so far is to announce that the managing team that oversaw the exchange during the hack. This is seen in the following official statement:

“All of our management team takes seriously that our valuable deposit assets have disappeared due to this hacking damage. As a result, even if the virtual currency equivalent to customer’s assets can be prepared by the above-mentioned funding etc., the concerns and inconveniences given to customers are tremendous.

As a result, our current management team has responded with full power to this matter, and we are fully committed to preserving the customer’s assets and fulfilling our obligation to hand over control to the management team of the Fiscal Group, which acquires a majority of control. We will retire our officers as a management responsibility.”

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Market Update: Dow Jones Hits Record High; Cryptocurrencies Hold Their Ground

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The Dow Jones Industrial Average notched record highs on Wednesday, as global bond yields continued to rise amid heightened trade tensions between the United States and China. Meanwhile, cryptoassets were little changed amid news that Fidelity Investments was preparing to unveil new crypto offerings this year.

Stocks Settle Mostly Higher

Strong gains in financials and materials stocks propelled the Dow to record highs on Wednesday. The blue-chip index climbed 158.80 points, or 0.6%, to close at 26,405.76. Financial blue-chips JPMorgan Chase & Co (JPM) and Goldman Sachs Group Inc. (GS) were the Dow’s top performers.

The broader S&P 500 Index edged up 0.1% to 2,907.94. The S&P’s financials index rose 2%.

Meanwhile, the Nasdaq Composite Index fell 0.1% to close at 7,950.04.

Bond yields rose across the board Wednesday as markets fully priced in a Federal Reserve interest rate hike next week. The yield on the 10-year U.S. Treasury rose back above 3% en route to fresh four-month highs. Germany’s 10-year Bund jumped to 0.5% for the first time in three months.

Oil Prices Rise on Supply Concerns

Crude oil was back on the offensive Wednesday, with U.S. futures prices surpassing $71 a barrel after government data showed a fifth weekly drawdown in commercial inventories. The U.S. Energy Information Administration (EIA) said commercial crude stocks fell by 2.057 million barrels in the week ended Sept. 14. Stockpiles fell nearly 5.3 million barrels the week before.

Gasoline demand, which normally falls in autumn, was estimated at 9.5 million barrels in the latest week as consumption continues to hold near summer levels.

The West Texas Intermediate (WTI) benchmark for U.S. crude reached a high of $71.63 a barrel on the New York Mercantile Exchange. It would later settle at $71.19 a barrel for a gain of $1.34, or 1.9%. Brent crude, the international futures contract, rose 16 cents, or 0.2%, to $79.19 a barrel.

Cryptocurrencies Hold Steady

The cryptocurrency market hovered around $200 billion on Wednesday as bitcoin and the major altcoins traded within a relatively narrow range. Trade volumes were down 17% compared with Tuesday.

The CEO of Fidelity Investments, the world’s sixth-largest asset manager, has confirmed plans to unveil a suite of crypto- and blockchain-based products later this year.

“We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time,” Abigail Johnson, Fidelity’s CEO, told Boston Fintech Week on Friday. “We hope to have some things to announce by the end of the year.”

Fidelity has been active behind the scenes researching cryptocurrency and mining bitcoin and Ethereum. While Fidelity’s mining operation turned out to be highly profitable during the bull market, the practice was intended to yield a better understanding of cryptocurrency networks and consensus.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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