Global crude prices have been easing from last week. WTI crude futures for June delivery on the NYME dipped 11 cents, or 0.23%, to trade at $48.20 a barrel by 07:55GMT.

Crude prices held near the prior session’s 7-month highs in early European season on Wednesday, amid speculation weekly supply data due later in the session will show U.S. crude inventories fell for the second straight week.

Crude stocks at the Cushing, delivery hub for WTI rose by 508,000 barrels, the API said, while gasoline inventories decreased by 1.9 million barrels and distillate inventories declined by 2.0 million barrels.

Despite some significant supply disruptions, most notably in Canada (wildfire), ongoing bearish fundamentals precipitated a modest retracement in prices.

Before the stock market crash in China, India was threatening to overtake it as the global leader in energy demand.

Technically, we’ve been seeing WTI crude oil prices showing up considerable intensity in buying interests especially after the formation of “dragonfly doji” on monthly charts. RSI & Stochastic converge price upswings to clear major resistance levels.

Hedging Framework:

3-Way Options straddle versus Put
Spread ratio: (Long 1: Long 1: Short 1)

Rationale: Bidding medium term longs with writing 1W OTM put contracts.    

As stated above energy commodity market turning into demand zones especially strengthened after “wildfires in Canada” that is impacting around 1.1 Mb/d of supply that in turn keeps us eye on loading up in longs, but uncertainties to meet with below hedging strategies.

How to execute:  

For long term commodity investors on hedging grounds, it is advisable to initiate longs in XAU/USD 3M At the money delta put, Go long 6M at the money delta call and simultaneously, Short 1M (1%) out of the money put with positive theta.