Just missed it
November 22, 2022
–Early action featured sizable call spread buying in SOFR, following Friday’s purchase of SFRU2 9700/9800cs for 4.25 to 4.5. Yesterday, +8k SFRM3 9600/9650cs. appears exit, settled 4.0 ref 9495.0. +10k SFRU3 9600/9700cs, looks new, settled 11.0 vs 9511.0. +40k SFRZ3 9700/9800cs, new, settled 8.0 ref 9540.5. +30k SFRH4 9700/9800cs, new, settled 14.75 ref 9578.0.
–New cycle low in 2/10 at -71.6. New low red/gold ED pack spread -77.625. Seven year auction today.
–Attached is a chart of WTI (CLF3) which rallied nearly $5 off the low of 75.27 yesterday as KSA denied reports that OPEC was going to increase production. From Reuters today: “Oil rose on Tuesday after top exporter Saudi Arabia said OPEC+ was sticking with output cuts and could take further steps to balance the market, outweighing global recession worries and concern about China’s rising COVID case numbers.”
–Market manipulation. Ethical lapses. Lack of a moral compass. FTX? Nope, try US policy with respect to SPR.
–Fist bump with MBS to get more oil supply and push prices down pre-election. True? The stated goal was to lower US gasoline prices. MBS snubbed the US. Instead of moving on, the Biden admin grants immunity to MBS for allegedly ordering the butchering of journalist Khashoggi, in order to get more oil. True? Not sure…but the news media is reporting immunity for MBS. Coincidentally, there are reports of mass beheading executions of drug traffickers in KSA. True? It’s being reported, and I will guarantee if I were a journalist, and had a suspicion that protections for the 4th estate go out the window as a bribe for cheap oil, I’d think twice about deep dig stories into KSA and MBS. The world knows the US is short oil for the SPR. The WSJ story about increasing production was an exit chance. Missed it.
