The market has shown some vulnerability over the past couple of sessions to trade down to new yearly lows for the March’23 contract, with yesterday seeing the price touch 17.19 before the late recovery. This morning was somewhat calmer again and after opening gains had eroded, we saw prices edging along within a tight band either side of 17.40 for the next few hours. The lack of positive movement was disappointing in the context of a firmer macro picture, and so it was with some irony that when the early afternoon saw the macro retreat (particularly the energy sector) so No.11 mounted a recovery to 17.62 for March’23 while the spot Oct’22 contract touched back to 18.00. The front spreads were finding fresh support on this movement with Oct’22/March’23 driving back out to 0.40 points, but despite appearances this merely represented a reversal of yesterdays movements and changes nothing within the fundamental picture which continues to look at an approaching surplus. That did not deter specs/day traders who were boosted by the turnaround and drove prices forward with increased aggression as we moved through the final hour, proving to be so successful in their efforts that March’23 reached to 17.87 approaching the call, almost reversing the losses of Friday also. Inevitable there was some end of day liquidation / profit-taking which sent values back from the highs on the call, however a close for March’23 at 17.80 brings values back into the range following the recent wobble, with Oct’22/March’23 also remaining firm at 0.39 points.
The market swung either side of unchanged as trading resumed following the extended bank holiday weekend, but though DFEc’22 traded as low as $522.10 there was a reluctance to slide too far and follow the recent No.11 trend. Things settled down somewhat in the $524/$525 area with a morning of quiet consolidation ensuing, and while this was lower on the day it represented a stable showing with the March/March’23 white premium a couple of dollars firmer at $111.50. A little more volatility entered the market as we moved through into the aft6ernoon with new lows registered ahead of a spike to $527.50, in amongst which the premiums gave back the morning gains due to rallying No.11 values. Nearby spreads were also struggling as we moved through the afternoon with Dec’22/Mar’23 slipping down to $27.10, the pressure resonating into the flat price and leaving Dec’22 to the lower end of its range while 2023 positions maintained within proximity of overnight levels. With the later afternoon seeing No.11 regain recently lost ground we pulled into positive ground and followed upward with increasing pace, particularly during the final hour as Dec’22 extended through $530 while March’23 pulled back above $500.00. These gains were maintained until the close when some aggressive selling/liquidation sent Dec’22 back into deficit, though settlement was little changed at $527.70. The late shenanigans also damaged the premiums with March/March’23 ending the day on its lows at $107.50.
