Kapsarc – Anticipating Trend Shifts in Oil Prices Using the Crude

The report by Kapsarc "Anticipating Trend Shifts in Oil Prices Using the Crude" examines the dynamics of crude oil pricing and forecasting. Crude oil prices exhibit distinct trends characterized by rising, falling, or range-bound movements, often influenced by changes in market fundamentals like supply and demand, legislation, and geopolitical events. Kapsarc utilizes the World Crude Oil Storage Index (COSI) to analyze oil price dynamics across different time frames. The COSI, a global index, captures major changes in oil price trends by reflecting spread options values from major ports. This index helps forecast significant price shifts in advance of futures markets. The report elaborates on the methodology behind using location spread options to estimate shadow prices of storage and highlights the implications of these financial derivatives on global oil markets.