Last week, the futures market was supported overall with an overall strong crude market as well as some gains in American gasoline. Here is a summary of what happened:
In Brent, the May contract was seen in neutral territory with the exception of Feb 22 ripping in overbought for a day. Volatility remains subdued on the back of an ever-decreasing open interest. Over the last week, the May RBOB contract although seen slightly increasing, remained rangebound as the RSI was at 51 on Feb 29. Prices for the ICE LS gasoil futures were rangebound which led to be in neutral territory. However, the latter has been declining downward, reaching lows of 37 on Feb 29.
The correlation between crude and other futures has been strengthening over the past week. Notably, the RBOB crack saw an overall appreciation in prices which was associated with Brent, leading to 0.76 correlation between both.
The WTI/Brent spread continued to narrow over the last week, with notably the May/Jun WTI/Brent box going from -5.50c/bbl in the week to Feb 23 to around -3.00c/bbl in the week to Mar 01.
In the latest CFTC data for the week to Feb 27, speculators in Brent were more bearish amid a rise in shorts alongside a decrease of length. WTI, by contrast enjoyed a more bullish stance this week, portraying an increase in net positioning of 43mbbls (+35%), to reside at over 165mbbls.
The EUR/USD saw a decrease in long positions and an increase in short positions this week. The USD/JPY operated in a similar vein. GBP/USD registered an increase in both bullish and bearish interest by 5% and 2%, respectively.
In the week to Feb 29, M1 refinery margins strengthened with the exceptions of Jet NWE, gasoil and 3.5 barges. EBOB demonstrated the most positive contribution, increasing by 46c/bbl.
ETF flows displayed a bullish week from Feb 26 to Mar 01. USO saw institutional investors selling puts, whereas SCO saw professional investors buying call options. Overall, the P/C ratio saw a week-on-week increase in USO and UCO.
In US equities, the S&P and NASDAQ indices saw further upward momentum, rising by 1.9% and 1.3%, respectively, with Nvidia performing strongly having gained 59% in 2024 so far.
The volatility skew in May Brent shifted lower signalling less willingness from participants to protect their positions. WTI on the other hand saw its curve shifting upwards.
