Summary
Last week, the Oct’24 Brent futures witnessed a significant sell-off, following which sentiment recovered. The benchmark crude futures contract went from $76.30/bbl on 06 Aug to $80.40/bbl on 12 Aug (at the time of writing). This recovery may have stemmed from better economic data, with US jobless claims falling by 17,000 to a seasonally adjusted 233,000 in the week ending 03 Aug – its largest drop in about 11 months. In addition, the past weekend saw an injection of geopolitical risk premia in the oil market amid rising tensions between Israel, and Iran and Hezbollah.
Looking at technical indicators, the Brent futures, ICE LS gasoil futures and NYMEX RBOB futures all lie within the bounds of neutrality based on both the RSI and the Bollinger bands. However, while the Oct’24 Brent futures contract witnessed a decline in open interest (OI), changes in OI were more mixed for the Oct’24 RBOB futures over the past week and printed a persistent increase in gasoil futures.
A correlation analysis highlights a slightly stronger positive correlation between crude (Brent, WTI and Murban) and RBOB cracks. Within refined products, gasoil cracks saw a slightly more positive relationship with both RBOB cracks and heating oil cracks, although gasoil and RBOB cracks continue to be only slightly positively correlated at 0.269.
The WTI/Brent swaps curve shifted higher w/w amid a rally in WTI spreads alongside Brent spreads. The Sep/Oct WTI futures spread was seen trading at $1.35/bbl on 12 Aug.
In ETF options, flows in USO oscillated between net buying and selling this week, although a rise in call options buying took net flow to positive on 12 Aug. By contrast, UCO mainly saw sell side traction this week, fuelled by selling in call options. Finally, the ultra-short ETF SCO saw net positive flow this week, although it also witnessed a decline in its put/call open interest in the week ending 12 Aug.
