Crude Rangebound as Assessing OPEC Supply Risks

Crude futures are edging down towards the lows from yesterday as the market assess the upside risk of an extension or a deepening of the OPEC group and unilateral supply reductions at the meeting this weekend.

• Front month is however still holding rangebound since yesterday ahead of the EIA petroleum inventory data later with technical analysis suggesting a bear threat remains despite gains late last week. Key support for the Brent Jan24 contract is down at a Fibonacci retracement at 75.51$/bbl.and short term resistance is at the Nov 14 high of 83.97$/bbl.
• Brent and WTI aggregate futures traded volumes have fallen below normal this week with Brent down at 0.850m yesterday and WTI falling to 0.483m compared to averages so far in Nov of 1.00m and 0.78m respectively. Aggregate option traded volumes were yesterday also below normal at 182k for Brent and 77k for WTI.
• The longer dated spreads are holding onto gains from last week supported by the risk of supply cuts but the prompt spreads are still showing a small contango.
• The options market is showing put strength suggesting cover for downside moves with the second month skew the most bearish since May while crude managed money net long positions last week fell to the most bearish since 27 June.
  • Brent JAN 24 down -0.6% at 81.92$/bbl
  • WTI JAN 24 down -0.7% at 77.2$/bbl
  • WTI-Brent down -0.04$/bbl at -4.72$/bbl
  • Brent JAN 24-FEB 24 down -0.02$/bbl at -0.05$/bbl
  • Brent JUN 24-DEC 24 unchanged at 2.05$/bbl
  • WTI JAN 24-FEB 24 down -0.01$/bbl at -0.16$/bbl
  • WTI DEC 23-DEC 24 up 0.24$/bbl at 2.55$/bbl