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OIL OPTIONS: Crude Put Skew Strengthens Despite Futures Support

OIL OPTIONS
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The crude options put options bias continues to strengthen despite growing market expectation for another delay to previously planned OPEC+ production hikes. A soft demand outlook for China and growing non-OPEC supply continues to weigh on prices.

  • OPEC+ has postponed its upcoming meeting until December 5 as the group tries to agree production levels for early next year.
  • Middle East risk premium has eased although headlines suggesting that the recently agreed ceasefire between Israel and Hezbollah has already been violated had provided some price support today.
  • The Brent second month call-put implied volatility spread has widened to -2.1% today after switching from a bias to the calls in the first half of November. The WTI second month skew is down to -2.75%.
  • Crude implied volatility has stabilised with Brent at 27.6% and WTI to 30.8% with front month futures bouncing within a $5/bbl range since mid October.
    • Brent JAN 25 up 0.8% at 73.38$/bbl
    • WTI JAN 25 up 0.7% at 69.18$/bbl

 

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The crude options put options bias continues to strengthen despite growing market expectation for another delay to previously planned OPEC+ production hikes. A soft demand outlook for China and growing non-OPEC supply continues to weigh on prices.

  • OPEC+ has postponed its upcoming meeting until December 5 as the group tries to agree production levels for early next year.
  • Middle East risk premium has eased although headlines suggesting that the recently agreed ceasefire between Israel and Hezbollah has already been violated had provided some price support today.
  • The Brent second month call-put implied volatility spread has widened to -2.1% today after switching from a bias to the calls in the first half of November. The WTI second month skew is down to -2.75%.
  • Crude implied volatility has stabilised with Brent at 27.6% and WTI to 30.8% with front month futures bouncing within a $5/bbl range since mid October.
    • Brent JAN 25 up 0.8% at 73.38$/bbl
    • WTI JAN 25 up 0.7% at 69.18$/bbl

 

Keep reading...Show less