Risk Assets And Oil

In the meltdown yesterday (Monday), SFOT finds 2 moves of interest within commodities and fx. 1) The fact that Gold has not been the safe haven asset over the past 3 trading days strikes me as that it is not going to push above $1000 this round amongst whisper of cash needed for margins and also Iindia demand for gold has fallen out of bed. 2) Safe haven currencies CHF, JPY are not strengthening a lot in this environment vs commodity currencies, AUD, CAD. With this in mind, SFOT is likely to favour buying the pair AUD/CHF with a fairly tight stop below 0.73. Also, Gold is probably not a buy now and he shall wait for the trend to turn before taking the dive.

Back to the oil complex, Brent crude recovered from its low of yesterday. With Opec meeting drawing near and the latest headline from Nigeria on explosion of a shell pipeline reminding us of the risk, SFOT will add another unit length to the slightly deferred price, and keeps his long spreads position in Brent. Gasoline cracks continue to hold firm and as we head into another DOE day tomorrow, SFOT notice that the sweet sour differential has widened out again towards $3. SFOT also hears that the east-west arbitrage for Fuel oil is now closed, hence fuel oil cracks should be under slight pressure.

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