OIL PRODUCTS: Europe Struggling to Absorb US Propane Flows

Option desks reported mixed flows on net Wednesday, pick-up in call interest following better low delta put interest early in the session. Underlying Tsy futures mixed, curves twisting flatter after the Sep FOMC minutes spurred renewed selling. Projected rate cut pricing has cooled vs. early morning levels (*): Oct'25 at -23.1bp (-23.7bp), Dec'25 at -44.6bp (-45.1bp), Jan'26 at -54.6bp (-55.2bp), Mar'26 at -64.5bp (-66.5bp).

• SOFR Options:
  • 2,750 SFRZ5 96.43/96.50/96.56 call flys
  • 4,000 SFRZ5 96.00/96.06/96.12/96.18 put condors
  • +10,000 SFRZ5 96.62/96.68 call spds, cab vs. 96.295/0.05%
  • Block/pit, +50,000 SFRG6 97.25/97.50 call spds, 1.0 ref 96.52
  • +2,000 SFRZ5 96.43/96.50 call spds, 0.75 vs. 96.315/0.08%
  • +25,000 0QX5 97.37 calls, 1.5 vs. 96.875/0.05%
  • 2,500 2QM6 97.62 calls, 4.0 vs. 96.74/0.12%
  • 4,000 0QM6 96.00/96.50 put spds WITH 2QM6 95.87/96.37 put spds, 16.5 total
  • +2,000 SFRZ5 96.00 puts, 0.5 ref 96.325
  • 3,000 0QH6 97.06/97.18 call spds vs 3QH6 96.75/97.00 call spds on 2x1 basis
  • +4,500 SFRZ6 96.12/96.50/96.75 broken put flys, 2.0 ref 96.94
• Treasury Options:
  • 5,000 FVX5 108.5/109.5 strangles, 13.5
  • +10,000 TYX5 113.5 calls, 9
  • 2,000 TYZ5 113/114 2x3 call spds, 26 net ref 112-22.5
  • +7,000 FVF5 110/111.5 call spds 18.5 vs. 109-12.25
  • Block, -4,200 TUF6 104.62/105.37 call spds, 7.5 vs. 104-08.62/0.25%
  • -7,000 wk2 TY 112 puts, cab-7 ref 112-25.5 (exp 10/10)
  • 4,000 wk2 TY 113.25 calls, 2 ref 112-24 (exp 10/10)
  • -5,000 TYZ5 111/112 put spds, 16 ref 112-24
  • +2,000 USX5 114 puts, 7 ref 116-31

• RES 4: 180.00 Psychological round number 
• RES 3: 179.50 Top of a bull channel drawn from the Feb 28 low
• RES 2: 178.94 1.236 proj of the Jul 31 - Sep 29 - Oct 2 price swing
• RES 1: 178.00 Round number resistance 
• PRICE: 177.85 @ 16:22 BST Oct 8
• SUP 1: 175.13 Hgh Sep 29
• SUP 2: 174.03 20-day EMA  
• SUP 3: 173.24 High Oct 3 and a gap low on the daily chart   
• SUP 4: 172.27 Low Oct 2 and a key medium-term support  

The trend set-up in EURJPY remains bullish and fresh cycle highs this week strengthens the bull condition. The cross has cleared resistance at 175.13, the Sep 29 high, to confirm a resumption of the primary uptrend and hit all-time highs in the process. The move higher this week also marks an acceleration of the uptrend. Sights are on the 178.00 handle next. Key short-term support has been defined at 172.27, the Oct 2 low.  

• Still bid, stocks are scaling back from record (Nasdaq) or near record (SPX) highs late Wednesday, still digesting the release of the September FOMC minutes.
• Currently, the DJIA trades up 22.23 points (0.05%) at 46,623.05 vs. 46,816.28 high, S&P E-Minis up 33.5 points (0.5%) at 6795 vs. 6,802.75 record high, the Nasdaq up 204.4 points (0.9%) at 22992.02 vs. 23,019.64 record high.
• Information Technology and Industrials sector shares continued to lead gainers in late trade, semiconductor and hardware makers supporting the former: Advanced Micro Devices +10.04%, Arista Networks +8.35%, Dell Technologies +7.88% and ON Semiconductor +4.84%
• The Industrial sector was buoyed by: JB Hunt Transport Services +4.74%, Quanta Services +4.35%, Caterpillar +3.73% and Old Dominion Freight Line +3.52%.
• On the flipside, Consumer Staples and Energy sector shares underperformed ahead midday, weighing on Staples: Tyson Foods -3.30%, Bunge Global -2.31%, J M Smucker -2.26% and General Mills -2.16%. Meanwhile, APA -2.53%, Texas Pacific Land Corp -2.13%, EQT -1.82% and Coterra Energy -1.59% led decliners in the Energy sector.