Energy markets continued to consolidate yesterday with Brent and WTI trading slightly higher, mostly on late-day news that the US Senate was close to a vote on the $900B stimulus package. Sing FO 180 and Sing Jetkero also drifted without much momentum before turning higher. Refined products, including US gasoline, have been showing slightly more strength than feedstock as a result of high crude storage levels and increasing refinery maintenance. This is despite completely lacklustre consumer demand. At the moment, it is the refined products that are responding quicker to any government stimulus news.
Consumer hedgers looking to protect against a “stimulus-inspired” surge to the upside in the second half of 2009 can look to the Sing Fuel Oil 180 2H09 $290/340 call spread strip, currently offered at around an average price of $17. This strip of call spreads can also be owned for zero premium by selling the $196 put in the same tenor. With the 2H09 underlying swap currently trading around $280, this represents $84 of breathing room on the downside.
Singapore, 09:00
Thursday, February 5, 2009
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