OIL: Crude Options More Bearish and Backwardation Softens
Nov-19 15:02
Crude options have turned more bearish and curve backwardation has softened slightly today as the front month has fallen in reaction to renewed efforts by the US to strike a Ukraine peace deal.
- Axios reported that the US has put together a new 28 point Ukraine peace plan after closed US-Russia discussions. It has been presented to the Ukrainians.
- A framework could be agreed by all parties by the end of the month, a senior White House official told Politico, and possibly as soon as this week. However, given failed previous attempts, a deal still seems a long way off.
- The Brent second month 25 delta call-put spread is the most bearish since mid-October switching from a call skew of around +0.6% earlier to a low of nearly -2.3% before recovering slightly to -1.8% currently. The WTI spread has moved from -0.3% to around -1.3% today, having briefly fallen to around -1.75%.
- Crude time spreads have also narrowed to reverse gains seen yesterday. The prompt Brent spread is back down to just above the low of the week at $0.43/bbl while the Jun26-Dec26 spread has pulled back closer to parity at around $0.12/bbl. The prompt WTI spread is little changed but Dec25-Dec26 spread has narrowed.
- Brent JAN 26 down 2.9% at 63.02$/bbl
- WTI DEC 25 down 3% at 58.9$/bbl
- Brent JAN 26-FEB 26 down 0.02$/bbl at 0.44$/bbl
- Brent JUN 26-DEC 26 down 0.24$/bbl at 0.13$/bbl
- WTI DEC 25-JAN 26 up 0.03$/bbl at 0.1$/bbl
- WTI DEC 25-DEC 26 down 0.4$/bbl at 0.6$/bbl
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CANADA: GoC Outperformance Holds On Q3 Surveys, CPI The Next Pre-BoC Test
Oct-20 14:54
- There has been little reaction in local assets to the Bank of Canada’s business and consumer surveys for Q3, having approached the release with CAD bottom of the G10 FX pack and GoCs outperforming Treasuries.
- BoC-dated OIS holds around 19bp of cuts priced for the Oct 29 decision, with CPI for September (tomorrow) and retail sales for Aug/Sep flash (Thu) before then.
- GoC yields still trade 2.5-3.5bp lower on the day across the curve, with the Can-US 2Y yield differential at -111bp (-3bp on the day).
- USDCAD at 1.4038 holds the day’s gains despite robust equity gains. Technicals suggest a bullish trend sequence remains intact, with resistance at 1.4080 (Oct 16 high and bull trigger) before 1.4111 (Apr 10 high) whilst support is at 1.3965 (20-day EMA).
- The BOS outlook was near unchanged at a subdued -2.3 in Q3 after -2.4 whilst the outlook for future sales fell from 6 to -2.
- Chiming with a tepid outlook, firms’ 1Y inflation expectations are now only slightly above late-2024 levels. “Businesses continue to expect cost increases due to tariffs and trade uncertainty. However, many said that weak demand is limiting their ability to pass these cost increases through to their selling prices.”
EURIBOR OPTIONS: ERH6 Call Spread Seller
Oct-20 14:53
ERH6 98.125/98.000 call spread, sold for 3.75 in 6k (vs 33% delta at 98.065)
Also sold for 4.00 in 1k around 35 mins ago.
SONIA OPTIONS: SFIH6 1x2 Call Spread Buyer
Oct-20 14:49
SFIH6 96.30/50 1x2 call spread, paper pays 2.25 in +4.5k (bought the 1 leg)
