Home / oil price / Seeking Alpha : Missing Risk Premium Could Lead To Oil Price Shock – SPDR S&P Oil & Gas Equipment & Services ETF (NYSEARCA:XES)

Seeking Alpha : Missing Risk Premium Could Lead To Oil Price Shock – SPDR S&P Oil & Gas Equipment & Services ETF (NYSEARCA:XES)

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This you will recognize as a risk premium for bearing the commodity price risk.
Speculators earn the risk premium, and hedgers benefit from off-loading the commodity price risk.
Going back to studies above, both demonstrated that an oil price risk premium of at least 9% was common.
The correlation of the group to oil prices is actually slightly in excess to the E&Ps, so if oil prices do rise, then these companies should do slightly better as a group.
This implies the risk is that oil prices will fall further and that there is essentially no risk premium for future oil delivery.

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Global Oil Price Slump Keeps Markets On Edge

Global Oil Price Slump Keeps Markets On Edge

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Falls in US Crude Oil Price Could Accelarate as Bears Take Charge

Falls in US Crude Oil Price Could Accelarate as Bears Take Charge

Talking Points- Both fundamentally and technically, the price of US crude oil is under increasing pressure.
The US crude oil price has been falling sharply in recent weeks and both technically and fundamentally there are good reasons to think that even sharper falls could be on the way in the next few days – affecting both stock markets and the currencies of oil-producing countries too.
In fact, traders have remained net-long since April 19, when US crude traded near $53.37; the price has moved 19.8% lower since then.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US crude prices may continue to fall.
That suggests even faster falls to come and has led to much speculation about $40 now being a possible target.

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