OIL OPTIONS: Brent Holds Strong Call Bias as Options Open Interest Surges
The near term Brent options continue to show a strong volatility bias to the calls as participants are seeking protection in the event of a price spike as risks still surround future Middle East supply while awaiting Israel’s response to Iran’s strikes.
- Brent option open interest has risen to a record high this month of over 4m contracts surpassing the previous high of 3.6m in September.
- The aggregate open interest across ICE Brent call option contracts is up to 2.41m for call contracts while put open interest has also risen to 1.68m contracts. The key open put option positions are spread between strikes 50$/bbl to 70$/bbl and the main call volumes are between 80$/bbl and 110$/bbl.
- Aggregate Brent options volumes are well above normal again this week, averaging 347k of which 244k is call options.
- The Brent second month 25 delta call-put spread is the most bullish since March 2022 up to just above 10% today while the WTI skew is nearly 6%.
- Brent DEC 24 up 1.9% at 76.37$/bbl
- WTI DEC 24 up 2% at 72.19$/bbl
Source: MNI / Bloomberg
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OIL: Chinese Stimulus & Geopolitical Risk Drives Rally, 50-Day EMAs Eyed
Both Brent and WTI are through their initial resistance levels, printing above $75.50 and $72.00, respectively.
- The Chinese monetary easing package, aiming to stimulate domestic demand as policymakers look to achieve their annual growth target, has been the key driver of the rally.
- Elsewhere, our commodities team has noted that the market also remains nervous when it comes to the threat of an escalation in tensions between Israel and Hezbollah. That situation will likely be discussed at the UN today.
- Bulls now target the 50-day EMAs, $76.45 in Brent & $72.38 in WTI.
- Recoveries in crude are deemed corrective at this stage but breaks above those EMAs would aid bullish technical arguments.
UN: General Assembly To Start w/Biden, Lula, Erdogan & Ramaphosa In AM Session
The United Nations General Assembly plenary session starts today, with a number of high-profile speakers to deliver their addresses from UN HQ in New York City this morning (eastern time). Given the heightened state of global tensions, with the ongoing war in Ukraine, escalation in the Middle East, and geopolitical rivalry impacting security in the South China Sea, the UNGA speeches by prominent national leaders will gain significant attention.
- The 24 Sep morning session (starting 0900ET/1400BST/1500CET), begins - as all UNGA plenary sessions do - with an address from the President of Brazil, Luiz Inacio Lula da Silva. Each speaker is allotted 15 mins to speak, but some variation is likely meaning timings are unlikely to prove exact.
- After Brazil is the speaker of the host nation (always the US) with President Joe Biden expected at around 0915ET (1415BST, 1515CET). Other speakers of note in the morning session include Turkish President Recep Tayyip Erdogan (~0930ET), Colombian President Gustavo Petro (~1030ET), and South African President Cyril Ramaphosa (~1100ET).
- Given the risk of wider conflict in the Middle East, speakers from the region will also garner increased attention. King Abdullah II of Jordan speaks at ~0945ET and Qatari PM and foreign minister Sheikh Tamim bin Hamad Al Thani will deliver his address around 1045ET.
- Full list of speakers can be found here.
GERMAN AUCTION RESULTS: 2.70% Sep-26 Schatz
| 2.70% Sep-26 Schatz | Previous | |
| ISIN | DE000BU22064 | |
| Total sold | E4.5bln | E4.5bln |
| Allotted | E3.708bln | E3.738bln |
| Avg yield | 2.14% | 2.41% |
| Bid-to-offer | 1.96x | 2.07x |
| Bid-to-cover | 2.37x | 2.49x |
| Average Price | 101.063 | 100.558 |
| Low acc. Price | 101.060 | 100.555 |
| Pre-auction mid | 101.057 | 100.552 |
| Previous date | 03-Sep-24 |
