OIL: Crude Options Skew Most Bearish Since Early December

Jan-24 10:28

Crude option skews have turned the most bearish since around Dec. 10 after President Trump yesterday called on OPEC to lower oil prices. 

  • Front month futures are finding some support today amid a softer US dollar but set for a net weekly decline amid market concern for US tariffs and support for US production. The bearish factors counter tighter supply risks due to US sanctions on Russia and Iran.
  • OPEC+ remains focused on market stability and will monitor developments, Platts said, with the next JMMC scheduled for Feb. 3 and a full ministerial meeting in May. The extended OPEC+ voluntary production cuts through Q1 have help keep a tight balance but output plans from April onwards are not yet certain.
  • The Brent second month 25 delta call-put volatility skew has widened to -2.0% after switching from a call skew at the start of the week. The bearish WTI skew is currently down to around -2.35%.
  • Brent second month implied volatility is drifting back towards the lows seen in December to 25.4% today while WTI is down to 27.7%.
    • Brent MAR 25 up 0.3% at 78.54$/bbl
    • WTI MAR 25 up 0.3% at 74.86$/bbl

 

Screenshot 2025-01-24 102537

 

Source: Bloomberg

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