Whether it was the pre-expiry squeeze or simply the Dubai conference effect the market was back on the front foot yesterday, a trend which resumed this morning as initial buying took May’23 up to 20.47 and within 5 points of the contract high. This should have provided the opportunity for specs/funds to push ahead to the next level however by late morning the gains had eroded to leave May’23 lacking clear direction as it sat back in the mid 20.20’s. March’23 was meanwhile remaining buoyant as it moved through its final day of trading with the March/May’23 reaching to 1.93 points initially before easing back slightly. Moving not the afternoon and with no sign of spec support the market set back further, slipping back through the same old range to 20.00 before attempting to stabilise, though volumes were so light it was hard to read any significance into proceedings. The afternoon then became one of quiet consolidation either side of 20.00, the market content to have a period of calm from a flat price perspective. March’23 meanwhile continued its strong expiry with a widest trade at 2.10 points for March/May’23, although May’23 was showing no such strength as it moves to the front of the board with May/Jul’23 dropping back to 0.48 points. May’23 ended the day calmly at 20.07, leaving a huge continuation gap to March’23 which it seems is unlikely to be filled soon. March/May’23 ended at 2.01 points with March’23 settling at 22.08. Early news is that the expiry will see 11,551 lots (586,820t) tendered with full details to be published by the exchange tomorrow.
There has been a good deal of volatility recently within the $560’s/$570’s and following yesterday’s recovery we saw the market set off firmly this morning to look toward the $578.30 contract high. Progress was initially rapid however some selling ahead of the contract high’s slowed progress before re touched to $577.20. That proved to be the peak for today however and with no support in place prices were soon trading into negative ground for the day against long liquidation. There has been limited buying for the May’23 spreads and premiums recently which is a concerning factor for the bulls, and though both were firmer on the morning push as May/Aug’23 touched $17.70 and the May’23 arb was valued towards $127.00 both were quick to give back the gains as the market slipped back. The decline continued through into the afternoon, and aside from a small pause the lack of buying meant that it continued through the afternoon to leave prices back in the lower $560’s and holding the bottom of the band once more. There was little change through the last couple of hours with the day petering out on the lows, May’23 settling at $562.40 to leave the longs rueing another failed rally.
