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Futures Report: Go Long Or Go Home

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A striking image of an offshore oil rig at sunset off the coast.

In Brent, Apr prices have continued to strengthen, hovering around the $82.50/bbl mark. Nonetheless, from a technical perspective, prices remain firmly within neutral territory on both a Bollinger band and RSI basis. The same can be said for both RBOB and gasoil futures prices which were at $2.65/gal and $835/mt, respectively, both on Feb 15.

The correlation between gasoil and crude was muted over the last week. Crude and RBOB correlations strengthened on the back of both complexes seeing upward price actions until American gasoline was hit by a more bearish momentum.

The WTI/Brent structure saw the Apr and Jun spread narrowing, pointing at a stronger WTI structure in this part of the curve. The Brent structure saw a strong week with a bullish sentiment that seems to be concentrated in the front of the curve.

In the latest CFTC data for the week to Feb 13, net positioning increased for Brent by over 42.2mbbls, compared to WTI which saw a more modest 23.1mbbls increase in net positioning. Brent prod/merc net positioning notably decreased drastically, by over 54.8mbbls.

The EUR/USD and the GBP/USD long participants reduced their length by 10% and 8%, respectively. The USD/JPY attracted more bullish interest as length increased by 11%.

In the week to Feb 16, M1 refinery margins have been weakening, with gasoil seen leading the bearish trend. This is in line with the Mar NWE gasoil crack declining by over 14.6%.

ETF flows were mixed across the board with USO notably seeing neutral flows over the last five trading days. Along with a positive flow for both UCO and SCO, the sentiment seems to be mixed for crude.

In US equities, we saw prices for both the S&P and NASDAQ indices dip by 1.3% and 0.4%, respectively, from their historical highs. On Feb 16, they were trading at $5,005.57 and $15,775.60.

Volatility skew for the week to Feb 19, both the Brent and WTI volatility skew curves shifted lower. However, Apr Brent futures saw more interest in delta calls than in previous weeks, although still lower than delta puts.

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Our team of skilled analysts, by utilising the depth and breadth of Onyx's proprietary data, position ourselves at the cutting edge of market analysis. This unique vantage point grants us an unparalleled perspective in the market, enabling us to identify emerging trends and lucrative opportunities.