The mood on commodity trading desks shifts by Friday afternoon, as traders begin to focus on managing risk rather than making profits. With traditional markets closed over the weekend, traders are now turning to crypto exchanges to trade derivatives contracts known as 'perpetual futures', which operate 24/7. This shift has significant implications for the oil market, where traders can now hedge their bets over the weekend, potentially reducing the 'weekend effect' that has long characterized commodity trading. Researchers at Energy Aspects note that the growth of perpetual futures on crypto exchanges is changing the dynamics of short-dated West Texas Intermediate crude options, with traders now able to hedge their exposure over the weekend.
While institutional traders have yet to fully embrace perpetual futures, the potential for 24/7 trading is likely to have a profound impact on the financial markets, with CME Group's CEO predicting that 'markets will be 24/7 down the road. All markets.'