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WTI Overbought Condition Now Fully Unwound

COMMODITIES
  • Oil markets extend their move lower, putting the active WTI crude future back below the $100/bbl mark on the more positive noises emanating from Ukraine/Russia peace talks as well as the protracted drop in Chinese equity markets, with the Shanghai Composite shedding another 5% overnight.
  • Oil options markets have suitably slipped, with the Brent market showing less upside price risk with lower liquidity. The Brent call-put skew has flattened over the last week suggesting the market is currently putting less upside price risk than last week. Implied Vol for 25D calls for May22 have fallen from 104 points back to around 74 points.
  • The drop in prices has allowed the technically overbought condition evident in WTI to completely unwind - putting the RSI back below the 50 level:

WTI Crude Active Future vs. rolling RSI:

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