Crude Time Spreads and Option Skews Fall amid Demand Concern

The crude curve backwardation and near term options skew continue to soften as the futures maintain earlier losses amid global demand concerns as Middle East supply risks have eased for now.

• Crude time spreads are softer with both prompt and the Jun24-Dec24 spreads steadily falling from a peak on Oct 20. The prompt 1-2 month time spread is today trading at the lowest since August, currently at +0.37$/bbl while Jun24-Dec24 is down at +2.17$/bbl.
• The second month Brent and WTI call-put skew is edging lower with put volatilities gaining some ground today while calls remain relatively unchanged. The Brent second month 25 delta call-put skew is today around -0.85% while the second month WTI skew is currently at -1.45%.
• Brent front month has today traded down through the first support at the Oct 11 low and a continuation would expose the key support at the Oct 6 low at 82.20$/bbl. The WTI Dec23 contract has breached support at 80.20$/bbl with next support at the Aug 29 low of 78.51$/bbl.
  • Brent JAN 24 down -1.6% at 83.79$/bbl
  • WTI DEC 23 down -1.5% at 79.59$/bbl
  • WTI-Brent up 0.11$/bbl at -4.43$/bbl
  • Brent JAN 24-FEB 24 up 0.02$/bbl at 0.41$/bbl
  • Brent JUN 24-DEC 24 down -0.06$/bbl at 2.19$/bbl
  • WTI DEC 23-JAN 24 up 0.02$/bbl at 0.24$/bbl
  • WTI DEC 23-DEC 24 up 0.11$/bbl at 4.38$/bbl