As Finance Magnates previously analyzed, the huge volatility has been largely beneficial for brokers, as client activity has increased, but at the same time, it has also caused challenges surrounding oil.
Oil markets experience wider spreads
Namely, the coronavirus pandemic has brought the global economy almost to a standstill. Since the pandemic set in, oil prices have dropped by almost half. At the beginning of the year in January, as the threat of COVID-19 continued to build, oil prices began to drop, as demand expectations fell.
Recently, the oil markets have seen much wider spreads than usual, which has lead to Liquidity Providers increasing their swap charges in response to the forward curve currently being observed in the underlying market.
Speaking to Finance Magnates, Andy Biggs, Head of Liquidity at CFH, explained: "CFH's rolling spot oil product updates swaps on a daily basis in accordance with the interbank market. Oil spreads are naturally wider given the huge volatility and more generally we're seeing less liquidity available at depth and the behaviour of that liquidity mirror much less liquid commodity contracts."
There are two main factors that have been influencing oil. Firstly, the oil price war between Saudi Arabia and Russia has significantly impacted the price of the commodity. This has seen Saudi Arabia significantly increase production in oil, tipping the balance between supply and demand and driving down the price. Secondly, COVID-19 has also heavily impacted demand. Therefore, the price of oil has gone from being traded at US$50down to US$20.
"The latest high impact event saw a Trump tweet suggesting Saudi Arabia and Russia would agree to limit production by 10 million barrels, roughly a 10th of global supply, cause a huge spike in pricing," Biggs highlighted.
Not a classic liquidity issue
However, as pointed out by Chris Nelson-Smith, the Head of Risk at Vantage FX, what we are currently seeing with oil isn't a liquidity issue in the classic sense: "Usually liquidity becomes an issue when there is an acute shortage and it is drying up. In this case there is a huge oversupply given the expected demand in the near future. Both WTI and Brent Oil prices have fallen by more than half this year; the sort of agreement required from the largest players to support oil prices would mean the deepest production cuts in history.
"Certainly the largest producer of oil, the US, would need to be involved and recent rhetoric from Trump regarding US participation in said talks led to the violent swings in the market in the last few sessions."
So how long can we expect these liquidity issues to remain? According to Nelson-Smith, the answer to that is unclear: "I have no doubt an agreement to reduce production will be done in the near future, but whether or not that will be enough to support oil prices in the face of the immediate glut of supply is questionable," he said.
"Until the global economy has a true idea of the expected timeline of a return to normality in the worlds biggest economies we will continue to see disruption in the energy markets."
In the wake of these issues, Vantage FX has adjusted its spread filters and maximum spread settings, to ensure that pricing is available for all of its markets and customers.
As Finance Magnates previously analyzed, the huge volatility has been largely beneficial for brokers, as client activity has increased, but at the same time, it has also caused challenges surrounding oil.
Oil markets experience wider spreads
Namely, the coronavirus pandemic has brought the global economy almost to a standstill. Since the pandemic set in, oil prices have dropped by almost half. At the beginning of the year in January, as the threat of COVID-19 continued to build, oil prices began to drop, as demand expectations fell.
Recently, the oil markets have seen much wider spreads than usual, which has lead to Liquidity Providers increasing their swap charges in response to the forward curve currently being observed in the underlying market.
Speaking to Finance Magnates, Andy Biggs, Head of Liquidity at CFH, explained: "CFH's rolling spot oil product updates swaps on a daily basis in accordance with the interbank market. Oil spreads are naturally wider given the huge volatility and more generally we're seeing less liquidity available at depth and the behaviour of that liquidity mirror much less liquid commodity contracts."
There are two main factors that have been influencing oil. Firstly, the oil price war between Saudi Arabia and Russia has significantly impacted the price of the commodity. This has seen Saudi Arabia significantly increase production in oil, tipping the balance between supply and demand and driving down the price. Secondly, COVID-19 has also heavily impacted demand. Therefore, the price of oil has gone from being traded at US$50down to US$20.
"The latest high impact event saw a Trump tweet suggesting Saudi Arabia and Russia would agree to limit production by 10 million barrels, roughly a 10th of global supply, cause a huge spike in pricing," Biggs highlighted.
Not a classic liquidity issue
However, as pointed out by Chris Nelson-Smith, the Head of Risk at Vantage FX, what we are currently seeing with oil isn't a liquidity issue in the classic sense: "Usually liquidity becomes an issue when there is an acute shortage and it is drying up. In this case there is a huge oversupply given the expected demand in the near future. Both WTI and Brent Oil prices have fallen by more than half this year; the sort of agreement required from the largest players to support oil prices would mean the deepest production cuts in history.
"Certainly the largest producer of oil, the US, would need to be involved and recent rhetoric from Trump regarding US participation in said talks led to the violent swings in the market in the last few sessions."
So how long can we expect these liquidity issues to remain? According to Nelson-Smith, the answer to that is unclear: "I have no doubt an agreement to reduce production will be done in the near future, but whether or not that will be enough to support oil prices in the face of the immediate glut of supply is questionable," he said.
"Until the global economy has a true idea of the expected timeline of a return to normality in the worlds biggest economies we will continue to see disruption in the energy markets."
In the wake of these issues, Vantage FX has adjusted its spread filters and maximum spread settings, to ensure that pricing is available for all of its markets and customers.
Finance Magnates Annual Awards 2024 | FM Awards 2024 Highlights
Finance Magnates Annual Awards 2024 | FM Awards 2024 Highlights
π₯Catch the best moments from the Finance Magnates Annual Awards Gala Dinner!
An evening where top names in finance came together to celebrate achievements, enjoy live music, and connect over a memorable dinner. Watch the highlights and feel the energy of our first gala in Cyprus!
Congratulations to all the winners for their dedication to excellence and leadership in the financial industry, including XM, Trading PRO, FP Markets, Deriv, FxPro, LATAM, Headway, ATFX, FBS, AMEGA, EC Markets, Axi
For more information about the 1st Finance Magnates Annual Awards, visit https://bit.ly/3Zb7wNz
#FinanceMagnatesGala #IndustryExcellence #GalaHighlights #FinanceMagnatesAnnualAwards #FinanceMagnatesAwards #CelebratingSuccess #FinanceCommunity
π₯Catch the best moments from the Finance Magnates Annual Awards Gala Dinner!
An evening where top names in finance came together to celebrate achievements, enjoy live music, and connect over a memorable dinner. Watch the highlights and feel the energy of our first gala in Cyprus!
Congratulations to all the winners for their dedication to excellence and leadership in the financial industry, including XM, Trading PRO, FP Markets, Deriv, FxPro, LATAM, Headway, ATFX, FBS, AMEGA, EC Markets, Axi
For more information about the 1st Finance Magnates Annual Awards, visit https://bit.ly/3Zb7wNz
#FinanceMagnatesGala #IndustryExcellence #GalaHighlights #FinanceMagnatesAnnualAwards #FinanceMagnatesAwards #CelebratingSuccess #FinanceCommunity
FMLS:24 | Shaping the Next Era of Financial Evolution
FMLS:24 | Shaping the Next Era of Financial Evolution
Welcome to FMLS:24 β the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether youβre in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
π Don't miss out β secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
#fmls #fmls24 #fmevents #financemagnates #forex #payments #crypto #events #london #fintech #ai #generativeai #technology #onlinetrading #forex #investing #investors #tech
π£ Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Welcome to FMLS:24 β the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether youβre in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
π Don't miss out β secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
#fmls #fmls24 #fmevents #financemagnates #forex #payments #crypto #events #london #fintech #ai #generativeai #technology #onlinetrading #forex #investing #investors #tech
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FMLS:24 | Shaping the Next Era of Financial Evolution
FMLS:24 | Shaping the Next Era of Financial Evolution
Welcome to FMLS:24 β the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether youβre in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
π Don't miss out β secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
#fmls #fmls24 #fmevents #financemagnates #forex #payments #crypto #events #london #fintech #ai #generativeai #technology #onlinetrading #forex #investing #investors #tech
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Welcome to FMLS:24 β the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether youβre in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
π Don't miss out β secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
#fmls #fmls24 #fmevents #financemagnates #forex #payments #crypto #events #london #fintech #ai #generativeai #technology #onlinetrading #forex #investing #investors #tech
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FM's Andrea Badiola Mateos at LSEG's Cyprus event
FM's Andrea Badiola Mateos at LSEG's Cyprus event
FM's Andrea Badiola Mateos at speaking in a panel discussion at LSEG's Cyprus event
FM's Andrea Badiola Mateos at speaking in a panel discussion at LSEG's Cyprus event
The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar
The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar
The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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