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Crude Oil Slumps With Supply In Focus, Gold Buoyed By Risk Off

COMMODITIES
  • Crude oil has slumped more than 4% today, with declines coming from various factors:
  • Uncertainty over China demand: updated manufacturing and non-g PMIs for May due out tomorrow.
  • Supply focus remains on the OPEC+ meeting at the weekend as some countries, such as Russia and Iraq, have suggested no changes to production targets are currently planned.
  • Physical supply remains ample - the June-July WTI cash roll has slipped, signalling low near-term demand and therefore sufficient physical supply at present prices. Contango has also deepened for the front of the WTI futures curve, reinforcing this view.
  • WTI is -4.35% at $69.51 with a low of $69.03that cleared support at $69.39 (May 15 low) before ticking higher, to next open $63.9 (May 4 low).
  • The day has seen particularly heavy option volumes for the CLN3 at $75/bbl calls (12k) followed by $80/bbl calls (7.5k) and $65/bbl puts (6.5k).
  • Brent is -4.50% at $73.60, off a low of $73.20 that pushed through support at $73.49 (May 15 low) to open $71.28 (May 4 low).
  • Gold meanwhile is buoyed by Treasury yields falling, currently +0.8% at $1959.18 in a decent recovery after clearing trendline support, although it doesn’t yet trouble resistance at $1971.7 (50-day EMA).
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