“Volatility can be neither created nor destroyed, rather it transforms from one form into another,” is a pretty fair summary of how the oil market works (with apologies to physicists). The benchmark price of Brent crude has been unusually stable since the middle of December, but there has been plenty of movement in the futures strip and crack spreads. Hedge funds have amassed an unusually large net long position in crude futures and options betting on a further increase in benchmark prices, but the position has not yet yielded much profit, with prices range bound. The more interesting and profitable trades for both hedge funds and physical traders so far in 2017 have been around the calendar, crack and quality spreads. Front-month futures prices have traded in a narrow range of just […]