Worries over the new swine flu dominated talk on trading floors yesterday as commodity markets followed equities lower. Risk aversion and pessimism stepped back into the spotlight forcing the selloff, although the energy complex did recover markedly in late NY trading.
Opec and non-Opec exports remain flat with westbound tanker movements regularly showcasing dramatic declines. From the product standpoint, most cracks experienced little movement as newfound pessimism drove markets lower in tandem. Plenty of focus was on the airline stocks and jet fuel demand yesterday as the spread of the swine flu threatens to do further damage to an already impecunious industry. Finished products such as jetkero, gasoline and other distillates may be facing fresh downturns in demand now that a global pandemic may be added to the list of the global economy’s problems.
Implied vols experienced a slight bump yesterday due to the severity of the price drop and unexpectedness of the cause. As the consolidation in crude markets becomes more apparent, expect volatility to decrease and option premiums to do likewise. The Singapore Jetkero Second Half of 2009 $75 call can be owned for only about $2,500 per 1000bbls/month when the $125 call is sold at a ratio of 2000bbls/month. Similarly, the Sing Jetkero 2H09 $75 call can be purchased for Zero Cost by accepting a price floor (short put) at the $55 level.
Singapore, 09:00
Monday, April 27, 2009
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