OIL: Crude Options Skew Most Bearish Since Early December

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

Source: Bloomberg