(The opinions expressed here are those of the authors.)
By Anna Szymanski
June 19 (Reuters) - Every Friday, Reuters Open Interest
(ROI) wraps up the financial week with five key charts,
highlighting major trends - and the surprising, sometimes
overlooked moves that defined the past five days.
1. OIL SHOCK, MUTED PANIC
RON BOUSSO, ROI Energy Columnist: Crude oil prices and
volatility did not surpass all-time highs recorded in recent
years, despite an unprecedented Middle East supply shock. This
may be because traders were making a bet that President Donald
Trump would not allow the conflict to spiral into a full-blown
economic crisis. So the more inventories were being run down,
the closer we were getting to a deal. It was a risky call, but
it proved correct.
2. SPACEX OPTIONALITY
ANNA SZYMANSKI, ROI Editor-in-Charge: Following its blockbuster
IPO last week, SpaceX saw its market cap soar past
Amazon's ( AMZN ) $2.65 billion valuation on Tuesday to briefly
top Microsoft's ( MSFT ) $2.92 billion. This was largely thanks
to frenzied trading in its newly listed options. In fact, over
500,000 SpaceX options contracts changed hands within the first
hour of trading on Tuesday, with that number rising to more than
1 million by early afternoon, according to Trade Alert data.
Given SpaceX's relatively small float and eye-watering
valuation, investors should probably expect volatility ahead.
The company's more than 8% combined drop on Wednesday and
Thursday may be an early taste of this.
3. CHINA SLAMS THE REFINING BRAKES
CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist:
China's refiners dipped into stockpiles for the first time in 14
months in May as the Iran war boosted crude prices. But the
draw, at around 500,000 barrels per day, was modest given the
drop in imports last month by about 3 million bpd from pre-war
levels. As total available crude oil fell, refiners cut
processing to multi-year lows - an extreme reaction that
underscores China's position as the major consumer best placed
to manage major supply disruptions.
4. DIVERGING PATHS
ANNA SZYMANSKI, ROI Editor in Charge: The Bank of England kept
its policy rate unchanged at 3.75% on Thursday, arguing it
would be premature to raise rates given uncertainty over the
strength of inflation pressures - particularly after the interim
U.S.-Iran deal, which should help ease energy prices. The
Federal Reserve also held its target range at 3.50%-3.75% this
week, as Kevin Warsh made his debut as chair on Wednesday. But
while the hawkish shift in rate expectations for the BoE has
started to moderate, the same cannot be said for the Fed.
5. COPPER BULLS PILE IN
ANDY HOME, ROI Metals Columnist: The breakdown of open interest
in the LME copper options market shows a heavy skew towards call
options, a snapshot of the bullish sentiment currently
underpinning prices. Investors are still looking for upside
exposure to copper, even after its strong run.
Opinions expressed are those of the authors. They do not reflect
the views of Reuters News, which, under the Trust Principles, is
committed to integrity, independence, and freedom from bias.
(By Anna Szymanski
Editing by Marguerita Choy)