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OIL OPTIONS: Brent Options Skew Returns to Near Parity

OIL OPTIONS
BulletEnergy BulletsCommodities

The Brent crude options bearish skew to the puts has narrowed back to near parity with risk of a market surplus in 2025 and uncertainty over the impact of Chinese economic stimulus measures on demand and the Trump presidency on US and Iran output.

  • Soft market prices during Q1 could impact OPEC+ output plans for this year with the return of voluntary production cuts already delayed from Oct 2024 until April 2025.
  • The Brent second month 25 delta call-put volatility skew is trading around -0.1% today having closed from between about $03.-$0.5/bbl for most of last week.
  • The WTI second month skew is around -0.6% compared to as wide as -1.4% on Jan. 3.
  • WTI aggregate open interest has surged to the highest since early Jun 2023 up to 1.933m although Brent open interest has dipped since mid December to 2.366m.
    • Brent MAR 25 up 0.3% at 76.71$/bbl
    • WTI FEB 25 up 0.3% at 74.18$/bbl
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The Brent crude options bearish skew to the puts has narrowed back to near parity with risk of a market surplus in 2025 and uncertainty over the impact of Chinese economic stimulus measures on demand and the Trump presidency on US and Iran output.

  • Soft market prices during Q1 could impact OPEC+ output plans for this year with the return of voluntary production cuts already delayed from Oct 2024 until April 2025.
  • The Brent second month 25 delta call-put volatility skew is trading around -0.1% today having closed from between about $03.-$0.5/bbl for most of last week.
  • The WTI second month skew is around -0.6% compared to as wide as -1.4% on Jan. 3.
  • WTI aggregate open interest has surged to the highest since early Jun 2023 up to 1.933m although Brent open interest has dipped since mid December to 2.366m.
    • Brent MAR 25 up 0.3% at 76.71$/bbl
    • WTI FEB 25 up 0.3% at 74.18$/bbl