We’ve discussed before the strong correlation between physical crude inventory levels and price movements. With the INE now in full swing, let’s take another look at this correlation - this time looking at the additional advantage offered by combining crude flows to gain an information advantage on INE price forecasting.
Just as Cushing inventory levels strongly shift the price of WTI (and all global prices), Chinese inventory levels can affect the INE price (and global prices overall). While the United States’ levels demonstrate the supply side of the equation, China represents the demand side and is equally important to fully understanding market balance.
When considering physical movements as part of the equation, combining crude storage data with flow data gives a more clear picture of what’s happening on the ground at INE locations, especially for specific grades of crude.
With frequently and consistently collected oil storage data, we can reliably understand inventory levels at the INE delivery locations overall or even down to the tank by tank level.
High-quality flow data then provides up to date information on physical transports of commodities going into these specific Chinese ports. Understanding flow and rate of flow of a physical commodity, on a grade by grade level, can provide a huge information advantage to understanding demand of that product and current levels within a specific port or province. This generally provides physical traders with knowledge to inform buy/sell decisions.
However, when you integrate the two - reliable storage data and flow data - you can determine not only storage levels as a whole, but inventories of specific grades of crude at each of the INE delivery locations. By correlating ship berths to specific tanks, grade information can indicate which tanks are holding which contents, while tank by tank storage data provides quantitative levels of these grades.
Ursa and ClipperData recently debuted our joint product to offer these unique insights into this essential aspect of the INE futures contract. Our new report contains terminal by terminal storage information, as well as imports into the INE terminals, allowing users to have a clear idea of demand and inventory for this contract.
Again, these factors strongly indicate prices and price movements and those who have up to date INE delivery information will forge a clear advantage in trading this contract. We will continue to monitor levels of flow and storage against the INE price, especially when deliveries under the contract begin arriving in September. Visit www.ursaspace.com/products for more information and to request a free data evaluation today.