Widening again
That prompt WTI crude spread has widened out again to more than $2/barrel with "upside for WTI limited at this stage," says Saxo Bank's head of commodities Ole Hansen.
"The prompt spread continues to diverge with April to May WTI at more than $2/b," says Hansen. "If you're long crude, it means paying up more than 4% to roll your position over and could have a negative impact on the retail money that has flown into ETFs."
WTI crude was at $47.09/b at 0755 GMT. European benchmark Brent was at $56.86/b.
Hansen caps WTI upside at $48.75/b but there could be a fall as far as $45.28/b.
Brent too could face further weakening as Iran is looking to buyers in Asia as indications that the UN might lift sanctions grow, potentially adding as much as 800,000 barrels of oil to global markets over the next three months.
973 again
If you think that oil story is bad enough, you should take a look at the gold narrative of the last two weeks.
Oil fell for the ninth consecutive day Thursday, the longest run of falls on a daily basis since glam rock, Muhammad Ali and Leeds United ruled the roost. In other words, 1973.
"Gold still has support at the $1,150/oz area," says Hansen. "This is entirely a dollar story and that will remain the key ahead of next week's Federal Open Market Committee meeting.
Let's swing
And talking of the dollar, From the Floor could not fail to notice that massive oscillation in EUR/USD yesterday, "with spot swinging 200 basis points" in the 1.05-07 zone, says the FX Option Desk's Gustave Rieunier.
That sent something of a tremor through the FX Options markets with EUR/USD one-month vols spiking to 13.2 in Asia when the spot hit the 1.05 mark.
"They later came back to 11.9 as spot moved up," says Rieunier. " A 1.3 move is extremely high in the space of eight hours and it it indicates that liquidity in the market is extremely poor and this is leading to very sharp moves."
EUR/USD was at 1.0614 at 0755 GMT having hit a low of 1.0494 during the Asian session, according to Christoffer Moltke-Leth from Saxo Bank's Singapore hub.
We are the robots
It wasn't the only big barrier breached during the Asia session either with the Nikkei 225 smashing through the 19,000 mark for the first time since April 2000 to finish the day at 19,254.95, says Moltke-Leth.
One of the major movers on the day was robot maker Fanuc Corporation (OTC:FANUY) Corporation, which surged 13% after it "announced it was considering increasing investor returns through dividends and buybacks."
Fed ahead
The markets in Asia and Europe nevertheless are starting to firmly fix their sights on next week's Federal Open Market Committee meeting and the impact it might have on that runaway dollar, notwithstanding yesterday's seeming slip against the euro.
"USD saw some renewed strength latterly inn the Asian day," says Moltke-Leth. "The implied position for Fed Fund Futures is for a 53% chance of a rate hike in September, but only 29% for a move in June."
Bonds await
Bonds too appear to be in a bind ahead of the pivotal meeting with Europe's fixed income rally "running out of steam" on Thursday, says the Fixed Income Desk's Michael Boye.
German bunds gave back a number of points yesterday but had rallied to 158 and were trading at 158.10 at about 0750 GMT this morning.
Boye also notes that Spanish and Italian 10-year bonds came within a whisker of going past 1% before retreating and could make another run at that level if the rally gathers steam again.