The week ending 28 Jan was characterised by de-risking in the benchmark Brent and WTI futures, more significantly in the latter. Combined open interest in the crude futures declined by 77.89mb (-1.76%) this week. This removal of risk emerged in the aftermath of unwinding hedges following Donald Trump’s inauguration and rising uncertainty ahead of the President’s 1 Feb deadline to impose tariffs on Canada and Mexico, with no confirmation on whether oil imports from these nations will be included as part of the tariffs. Additionally, we may have seen some de-risking ahead of liquidity drying up in the East after 29 Jan as East and South East Asia celebrated the Lunar New Year. Finally, 27 Jan witnessed rising turbulence in equity markets, especially technology and AI stocks, following the launch of China’s DeepSeek, an inexpensive, open-sourced AI model. This turbulence may have filtered into other risk assets, such as oil.
