The crude option call-put skew has turned the most bearish since early June as front month Brent futures have fallen from a high of $81.59/bbl on Aug 27 to the lowest since December amid market oversupply risks.

• Weak demand in China and non-OPEC supply growth are adding to the possible return of OPEC+ voluntary cuts gradually from Oct to potentially push the market balance into a surplus.
• A Bloomberg report today of “strong” indications for an agreement to overcome the current deadlock in Libya could return 500kbpd of supply.
• The Brent second month 25 delta call-put spread is today at -3.3% from -1.0% on Aug 26 while the WTI second month skew is down from 1.9% to -3.85% in the same period.
• Crude implied volatility continues to rebound with Brent second month up to 28.4% and WTI at 31.4%.
  • Brent NOV 24 down 4.4% at 74.11$/bbl
  • WTI OCT 24 down 3.9% at 70.66$/bbl
  • WTI-Brent up 0.06$/bbl at -4.2$/bbl
  • Brent NOV 24-DEC 24 down 0.27$/bbl at 0.52$/bbl
  • Brent DEC 24-DEC 25 down 0.87$/bbl at 2.38$/bbl

Source: Bloomberg