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Crude Option Downside Put Skew Continues to Narrow

OIL OPTIONS

The near term crude downside put skew continues to gradually narrow this week back to levels seen in mid November.

  • Crude front month futures are currently holding between about 75.5$/bbl and 76$/bbl after pulling back from a high of 76.5$/bbl earlier today. The market is weighing the OPEC+ member commitment to voluntary cuts planned for Q1 against non-OPEC supply growth and potential slower demand growth in 2024.
  • Updated monthly reports from EIA, OPEC and IEA this week will provide outlooks for market developments for the coming year with updates to supply and demand forecasts.
  • Brent crude second month 25 delta call-put skew is today up to -4.2% from as wide as -7.7% on Nov 23 while the WTI second month 25 delta call-put skew has closed to -4.45% from around -6.9% on Nov 29.
    • Brent FEB 24 up 0% at 75.85$/bbl
    • WTI JAN 24 down -0.1% at 71.16$/bbl

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