Risk Assets Reverse After NFP as Crude Holds Its Bid

Yesterday’s NFP payrolls figure sparked a sharp reversal in risk-assets by mid-morning. Equities had shown outsized strength into, and through the release but ended the day lower. Treasuries posted similar price action, with longer term bonds posting a pump-fake break out before setting lower. Rate cut expectations through 2026 were paired back.

Negotiations with Iran are breaking down and geopolitical risk continues to drive price action within Crude markets. On Monday we noted that tensions with Iraqi leadership is also fraying, this is a wild-card catalyst to watch out for.

Crack spreads have rallied back to local highs and Russian – Ukraine talks have seemingly gone nowhere. The presence of bearish catalysts is outweighed by the bull factors.

Weekly Technical:

Monday – Risk remains skewed to the upside and our 62.57*** level has held for now. US based price action will be telling. While we price risk to the upside, patience is required on additional longs as this catalyst may take some time to play out. President Trump is erratic, Iran is erratic, and peace negotiations themselves are inherently erratic – so trying to put an exact timer on this catalyst is a fools errand.

Monday – We still favor risk-defined upside plays through the weekend as upside volatility remains underpriced relative to the potential catalyst in-play (in our opinion).

Tuesday – With the record call activity yesterday, traders should be patient if looking to position on the upside. There is a clear trend-line developing, but chaotic Iran headlines are likely needed to break out of this trading range.

Tuesday – Yesterday our intraday outlook posted first resistance at 63.90 with the probability of a run towards 64.50 if breached. Price is consolidating up at that 64.50 level this morning which aids in our bullish tilt.

Wednesday – Price has reached the upper band of resistance at 65.52***. New headlines surrounding Iran have come to light, and a breakout of this trading range is entirely likely, but taking some profits at these levels is prudent.

Updated Technical:

Yesterday, CL punched out above our key resistance level of 65.52*** into the US open, making a high of 65.83. Prices reversed off these highs as US trading came online, but not with as much fervor as we had seen in prior weeks. Intraday prices continued to hold firm’ish around our intraday pivot around 64.80. Prices had not reached the lower band of intraday price discovery until 4:30am which was met with a Bid.

Profit taking near that 65.52*** was our tilt yesterday. Today we’re looking to add-back some risk-defined long exposure in options markets. Vol looks relatively cheap when paired against the catalysts out there. Staying risk-defined helps protect against any “erratic” behavior out of our Executive branch while maintaining attractive risk-reward potential if our catalyst does get realized.