Oil has been batted around this week as the market tries to get a sense of what’s happening to Russian barrels and with the overall risk mood in markets. It was beaten up on Wednesday in a relatively calm day and then it rebounded yesterday and today despite the risk rout. Some of that suggests that oil is being used as a hedge and that helps to explain the heavy short interest. As books were pared down yesterday, the shorts were covered.
Zooming out, the weekly chart shows that the volatility of the past three weeks is all still within the Oct 20 weekly move, so the consolidation continues.
oil weekly WTI
Under the surface it’s more interesting as crude futures flipped into contango today (though the curve is very flat overall) and 3-2-1 crack spreads have blown out to the widest of the year at $31.89.
