As of today, the China INE futures contract has been officially launched. In preparation, we’ve been sharing our insights - from our regular monitoring of the inventory levels at INE locations - on the contract.
Through our analysis, we’ve confirmed a strong correlation between two relevant values - Ursa INE delivery location inventories and Dubai crude prices priced in Yuan. (We use Dubai crude price in Yuan as a proxy for the INE futures contract.)
Now that we’ve established this relationship, we can use linear regression to create a model predicting weekly Dubai crude price based on INE inventory as the independent variable:
When using this simple model to backtest and predict Dubai price, we were correct on direction of change on a week to week basis 26 of 40 (60%) times. More sophisticated modeling techniques can be used to derive even more value from the correlated inventory value.
Now that the INE is launched, monitoring specific inventory levels at these delivery locations - using proven methodologies that deliver reliable, accurate and timely data - can give great fundamental or systematic insights into the INE futures contract.
Ursa provides highly reliable and consistent data on these specific terminals. Reach out today to learn more about our data and how it can be used.