A weak equity market proved the catalyst to finally pull front-month WTI firmly back under $40. Worries that the new US stimulus package will not be able to strengthen the still weakening economy undid the recent consolidation in both energy and equity markets. Sing Fuel Oil and Jetkero markets are expected to push lower during Asian trading hours, also reversing a recent, albeit fragile trend higher.
With an enormous amount of stimulus entering the world’s largest economies, traders are focused on energy markets beginning to recover in the second half of 2009. An almost unlimited number of Sing Jetkero hedging structures are available to protect against this possible upside push. The July 2009 through June 2010 Sing Jetkero $100 call strip can now be purchased for an average price of only about $2,250 per 1000 barrels per month. Owning this call at this inexpensive level allows for unlimited protection above $100 for the entire 12 month period. The $100 call strip can even be purchased for Zero Cost by selling the $54 put in the same tenor. With the July09-June10 calendar swap currently trading around $69.00, this hedge provides unlimited protection above $100 with Zero premium at risk unless the underlying swap moves below $54- about $15 below the current value.
Singapore, 09:00
Tuesday, February 10, 2009
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