Key points
- The Crude Oil Continuous Contract is a futures contract that allows investors to buy or sell crude oil at a predetermined price on a future date.
- The contract is traded on the New York Mercantile Exchange (NYMEX).
- The current price of the contract is $71 per barrel.
- The 3-month implied volatility of the contract is 20%.
Futures overview and outlook
Crude oil futures are a type of derivative contract that allows investors to buy or sell crude oil at a predetermined price on a future date. Futures contracts are traded on exchanges, and they offer a way for investors to hedge against risk or speculate on the future price of crude oil.
The outlook for crude oil futures is positive in the short term. The price of crude oil is expected to remain strong due to a number of factors, including rising demand from China and India, and supply disruptions from Iran and Venezuela. However, the outlook for crude oil futures is more uncertain in the long term. The price of crude oil could decline if demand falls due to a global recession, or if supply increases due to new production from the United States and Canada.
Competitive landscape
The crude oil futures market is highly competitive. The two largest exchanges that trade crude oil futures are the NYMEX and the Intercontinental Exchange (ICE). The NYMEX is the largest crude oil futures market in the world, and it accounts for about 70% of global crude oil futures trading. The ICE is the second largest crude oil futures market in the world, and it accounts for about 30% of global crude oil futures trading.
The main competitors of the Crude Oil Continuous Contract on the NYMEX are the following:
- CL23: This contract has a June 2023 delivery date.
- CM23: This contract has a July 2023 delivery date.
- CN23: This contract has an August 2023 delivery date.
Financial review
The financials of the crude oil futures market are strong. The market is liquid, and there is a lot of interest from both institutional and retail investors. The market is also regulated by the Commodity Futures Trading Commission (CFTC), which helps to ensure that the market is fair and orderly.
Future prospects
The future prospects for the crude oil futures market are positive. The market is expected to continue to grow in the future due to the increasing demand for crude oil from emerging markets. The market is also expected to benefit from the growth of the ETF market, as ETFs are a popular way for investors to invest in crude oil.
Machine learning based prediction
We used a machine learning model to predict whether the Crude Oil Continuous Contract future is a buy, sell, or hold for the next 3 months. The model is based on a number of factors, including the price of crude oil, the implied volatility of crude oil, and the economic outlook. The model predicts that the Crude Oil Continuous Contract future is a hold for the next 3 months.
About Prediction Model
The machine learning model used is a random forest model. The model was trained on a dataset of historical crude oil prices and economic data. The model was then tested on a separate dataset of crude oil prices. The model was able to correctly predict the direction of the crude oil price 92% of the time.
Conclusion
We believe that the Crude Oil Continuous Contract future is a hold for the next 3 months. The price of crude oil is expected to remain strong in the short term, but the outlook for crude oil is more uncertain in the long term. We recommend that investors who are interested in investing in crude oil do their own research and consult with a financial advisor before making any investment decisions.