- Oil prices opened lower for the third day in a row, driven by the growing threat to demand from the spread of the delta variant
- The slide in oil prices pushed put skew more bearish
- The Biden administration will proceed with federal oil and gas leasing so it can comply with a recent court order it has decided to appeal
- On Monday, the US Interior Department appealed a federal judge’s preliminary injunction that effectively blocked Biden’s order on January 27 to halt leasing during a comprehensive review (Argus)
- The administration’s announcement followed a joint lawsuit filed by the American Petroleum Institute (API) and 11 other groups, arguing that the Biden admin violated the law by suspending oil and gas leasing since taking office
- The API-led lawsuit is one of many but represents the largest coalition of large oil and gas producers
- WTI’s put-skew widened on Monday following the third day of trading loses
- The spread between WTI’s three-month 25-delta put and 25-delta call has widened to -7.95; the widest since February
- A wider spread, or deeper put-skew, means that traders are leaning more bearish as they see more risk to the downside
- AEGIS notes that the more bearish put-skew is still nowhere near levels observed in November of 2020, where put-skew was double current levels