- Oil prices rebounded Wednesday morning from another sharp dip in prices yesterday
- OPEC and their allies are set to meet tomorrow to discuss their supply policy amid wild volatility
- Omicron variant uncertainty has been the main driver pressuring oil prices, but the prospects for a faster tapering of stimulus by the U.S. Federal reserve contributed to the price decline on Tuesday
- The options markets have moved more bearish and showed signs of stress, with Brent and WTI volatility both climbing to the highest since May 2020 (BBG)
- Put skews also steepened, with Brent at its highest since April 2020 and WTI’s since May 2020
- Both benchmarks closed below their 200-day moving average for the first time in about a year as of Tuesday
- AEGIS notes that heavy put skew can make costless collars less attractive as buying the put becomes more expensive and the sold call is worth relatively less