Risk was off yesterday. Equities and oil both retreated, although the trigger points differed. A large part of the US government remains dysfunctional, official data are not forthcoming, and investors have consequently shifted their attention to private surveys. The official CPI report, which was due on Wednesday, was not published. The next best thing, the consumer price index estimate for durable and personal goods from the analytics firm OpenBrand, therefore, gained in significance. It showed an uptick in prices last month, prompting equities to correct southward, while gold also fell back below the $4,000/ounce mark. Economists have also seen jobless claims rising. The French political turmoil and fading hopes of a BOJ rate increase also weighed on sentiment, although at this stage, the retreat in equities is probably just what it appears to be: a correction.

Yesterday brought the most significant progress yet in the horrific two-year conflict between Israel and Hamas. The warring parties have signed off on the first phase of a 20-point plan to end the bloody confrontation, which was ratified by the Israeli government overnight. There is no denying it is the greatest diplomatic victory for President Trump, whose administration has been the chief architect of the agreement, for which it must be lauded. Hostages will, hopefully, be released soon; humanitarian aid should begin flowing uninterrupted into Gaza; and Israel will withdraw its troops from the obliterated enclave.

It is, however, only the first, albeit critical, step toward a lasting peace. It is imperative that, once the first phase is completed, the rest of the agreement be implemented. Consensus will be required on Hamas laying down its weapons, the demilitarisation of Gaza, and the formation of a temporary transitional committee of Palestinian technocrats to govern the region until it is handed over to the Palestinian Authority. These are serious sticking points, and only by rigorously following through with the US proposal can the current, welcome breakthrough evolve into a permanent peace. Until then, oil will continue to react sensitively to headlines, just as it did yesterday, when it dropped a dollar on news of Israel and Hamas agreeing to cease fire.

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Donald Trump has a wide base of supporters and a significant number of adversaries, both domestically and internationally. His decisions are usually unconditionally welcomed by the former and promptly criticised by the latter. Then there is a third category: those who do not take sides, at least not publicly, but still enjoy the benefits or suffer the consequences of the US administration’s capricious, hectic, and volatile policymaking.

The world’s two largest energy exchanges, the Chicago Mercantile Exchange and the Intercontinental Exchange, are reaping whatever rewards there are to reap from the second Trump presidency. This is what the trading volumes in the five leading futures and options contracts during the first three quarters of 2025 imply.

Combined average daily volume (ADV) reached an annual record in the January–September period, standing at 3.84 billion barrels, an increase of 12% from the whole of 2024 and almost double the ADV recorded in 2014. To put the absolute figure into perspective, it represents 36 times the daily physical oil consumption. Although both exchanges offer a range of services and investment opportunities, the record ADV in oil has undoubtedly contributed to the rise in their share prices this year, approximately 10% for ICE and 14% for CME (as of October 8).

ADV in every contract exceeded last year’s average. The largest growth was seen in CME Brent, which advanced 69% between January and September compared with the 2024 average, followed by ICE Heating Oil, which rose by 61%. The major driving forces shaping investor sentiment are international in nature (military conflicts in key oil-producing regions and economic confrontations across the globe). This probably explains why ICE’s two major contracts, Brent and Gasoil, have reached their highest-ever ADVs this year. Yet it is also intriguing that the CME Heating Oil contract has recorded its highest annual ADV so far. It is a comprehensible demonstration of how drone attacks on Russian refineries, for example, ripple through the US distillate market. The CME RBOB contract is also within touching distance of its peak annual ADV reached in 2017.

The composition of ADVs on the two exchanges, however, has diverged since the pandemic. On the CME, WTI accounted for 77% of total volume in 2020, with Heating Oil at 11% and RBOB at 12%. Over the past five years, liquidity in the two product contracts has revived. This year, Heating Oil accounts for 15% of total CME volume, RBOB 14%, and WTI ‘only’ 71%. On ICE, the opposite trend is observed: Brent’s share of total volume has increased from 74% to 77% between 2020 and 2025, while Gasoil’s share has fallen from 26% to 23%.

And finally, volatility. It is a frequently cited mantra that volatility has a tangible impact on trading volumes, and looking at this year’s monthly breakdown, one might conclude that truer words have never been spoken. Shortly after the now-infamous and surreal ‘Liberation Day’ of US tariff announcement in April that sent markets into a tailspin, volatility in the European crude oil benchmark spiked to 40% (compared with a year-to-date average of 29%). Combined ADV reached 4.8 billion barrels that month.

It is also worth noting that high volatility is usually associated with falling oil prices, and vice versa. The two are inversely correlated. One of the defining characteristics of the incumbent US president is his norm-busting nature, but even he has not been able to overturn this relationship: volatility remains negatively correlated with price movement. From the reverse angle, it is notable that last month’s volatility, at around 21%, was well below the annual average, while ADV fell to its lowest level of 2025. Oil prices, although not exactly galloping out of sight, remained stable.

When considering these three factors, ADV, volatility, and price, a kind of transitory equilibrium appears to have been established. The first sign of this balance being upended will likely come from a spike in volatility. Until then, expect solid-to-higher oil prices. This view is maintained for now despite the landmark Middle East agreement. The two-year conflict has repeatedly failed to provide sustained oil price support; therefore, there is no reason to believe that the tentative deal, on its own, will lead to a protracted cheapening of oil.

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