EU ENERGY SECTOR: BP Q4 Trading Update; Slight Negative
BPLN A1/A-/A+ Curve Steady
Slight negative on lower production volumes and net negative other impacts albeit with net debt flagged lower. Also noting CMD delay due to CEO absence.
- Average brent price was down from USD 80.34 in Q3 to USD 74.73 (+1.3% vs. BBG cons) while HH gas was up from USD 2.15 to USD 2.79 (in line).
- Production seen lower QoQ in both oil and gas & low carbon
- Oil: realisations to have a negative impact of USD 0.2-0.4bn on Mexico/UAE price lags. Exploration write-offs seen USD 0.1-0.2 lower.
- Gas & LC: realisations to have a positive impact of USD 0.1-0.2bn on improved gas pricing. Marketing/trading result seen as average.
- Customers (Retail): Decline in seasonal demand, lower fuel margins (likely from cost pressure or pricing strategies), FX losses, and a bio-ethanol-related adjustment.
- Products (Downstream): Reduced refining profitability due to weaker margins (neg impact of USD 0.1-0.3bn) and heightened turnaround activity. Oil trading also underperformed.
- Net debt seen lower QoQ inclusive of USD 2.8bn in divestment proceeds, hybrid refinancing and USD 3bn in acquired debt.
- CMD delayed to 26 Feb as CEO is out of office recovering from a medical procedure.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
