A calm start to the session soon drew in a little consumer buying and this pushed Oct’23 up to 26.18, just a point shy of yesterday’s highs. A small amount of long liquidation then followed and emphasised the issue faced by bulls currently with the market plunging back to 25.86 on just 1,600 lots, conveniently finding support in the same area as yesterday afternoon and enabling the market to settle down into a consolidation pattern. The ensuing “sideways” period lasted through into the afternoon, and it was only the arrival of the US based traders that drew a small widening of the range with a brief push down to 25.75. Small specs/day traders duly returned to the market with another round of buying and pulled Oct’23 back above 26c in an effort to instigate a sustained move higher, however by now the Jul’23 spreads were coming under pressure once again which provided another challenge to overcome. Across the afternoon the Jul/Oct’23 differential eroded away, the pace of selling gathering as it moved to single digits and a session low recorded late on at just 0.01pt premium. This led to futures values being dragged back to the lower end of the range during the final hour (new selling and long liquidation) and while Oct’23 settlement at 25.85 represents continued consolidation of recent gains the message from the spread is more severe and is likely to further hinder upward progression for the near term.
The session began positively with a push to $705.00 during early trading, and though the price eased once any overnight hedge lifting had been concluded the Aug’23 price remained stable either side of $700.00. As the morning progressed so the price started to wobble a little with the focus moving increasingly to the upper $690’s, by no means a critical movement but one which remains consistent with the recent reluctance of the spot month to track higher unless receiving strong outside/macro assistance. This descent continued into the early afternoon before finding support versus US specs to pull the price back up to unchanged, though by now the nearby spreads were under pressure and Aug/Oct’23 had returned to a small discount, continuing the contrarian spread movement which will concern the bulls. The $700 area was maintained for a couple of hours though without ever suggesting that we may re-challenge the morning highs, and with the spreads under increasing pressure the flat price turned and retreated once again during the final hour. Buyers were few and far between as Aug/Oct’23 fell to -$4.50 and Aug’23 to $691.60, and while some positions were closed out in and around the call it had little impact upon the price with Aug’23 settling at $693.40. It remains hard to see how the market rallies further in the near term unless some strong, fresh bullish news emerges, with a continuation of the wide range seen across this month the likely path to follow.
