OIL PRODUCTS: Brazil’s Imports of Russian Diesel to Remain Strong in Early 2024
Russian diesel flows to Brazil are expected to remain steadily strong in early 2024, as Brazilian buyers rely on cheap imports due to the latest domestic diesel price adjustment from Petrobras, according to market sources, cited by Platts.
- Brazil imported 7.7mn barrels of diesel from Russia in November. Imports from Russia during 1-8 December stood at 1.9mn barrels, S&P Commodities at Sea data showed.
- Brazilian importers found themselves forces to rely on cheaper Russian imports to remain competitive before Petrobras' domestic price adjustment that came into effect on 8 December, which brought down diesel wholesale prices by 3.8% to $1.2057/l, Platts reported. So far in 2023, Petrobras has slashed wholesale diesel prices by 15.8%.
- "The arbitrage in Brazil was open more than 50 cents/gal," a market source said. "Petrobras made a catch up."
- Market sources said that the price adjustment has made Petrobras product less expensive and closer to the price of US Gulf Coast-origin diesel.
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USDCAD TECHS: Bullish Outlook
- RES 4: 1.129 1.382 proj of the Sep 19 - Oct 5 - Oct 10 price swing
- RES 3: 1.4067 2.0% 10-dma envelope
- RES 2: 1.3977 High Oct 13 2022 and a major resistance
- RES 1: 1.3899 High Nov 1 and bull trigger
- PRICE: 1.3828 @ 16:42 GMT Nov 10
- SUP 1: 1.3658/29 50-day EMA / Low Nov 6
- SUP 2: 1.3594 Trendline support drawn from the Jul 14 low
- SUP 3: 1.3496 50.0% retracement of the Jul 14 - Nov 1 bull phase
- SUP 4: 1.3417 Low Sep 29
USDCAD managed to find support this week at Monday’s 1.3629 low and is holding on to its latest gains. The trend is up and moving average studies are in a bull-mode position. Support around the 50-day EMA, at 1.3658, has remained intact and this suggests the move lower between Nov 1 - 6 has been a correction. Sights are on the bull trigger at 1.3899, Nov 1 high. On the downside, a clear break of the 50-day EMA would be a bearish development.
AUDUSD TECHS: This Week’s Bear Leg Appears To Be A Correction
- RES 4: 0.6600 3.0% 10-dma envelope
- RES 3: 0.6582 50.0% retracement of the Jul 13 - Oct 26 bear leg
- RES 2: 0.6522/23 High Aug 30 and Sep 1 / Nov 6 and key resistance
- RES 1: 0.6449 High Nov 8
- PRICE: 0.6349 @ 16:38 GMT Nov 10
- SUP 1: 0.6330 76.4% retracement of the Oct 26 - Nov 6 rally
- SUP 2: 0.6315/0.6270 Low Oct 31 / 26 and the bear trigger
- SUP 3: 0.6215 2.236 proj of the Jun 16 - Jun 29 - Jul 13 price swing
- SUP 4: 0.6170 Low Oct 13 2022 and a key support
AUDUSD remains below Monday’s 0.6523 high and the pair has traded lower today. Despite the latest pullback, a S/T bull cycle remains in play and the move down appears to be a correction. A resumption of gains would refocus attention on key resistance at 0.6522, the Aug 30 and Sep 1 high. A clear break of this hurdle would strengthen bullish conditions and open 0.6582, a Fibonacci retracement point. Key support lies at 0.6270, the Oct 26 low.
US TSYS: UofM Infl Exp's Higher Than Estimated, Focus on Next Tue's CPI
- Treasury futures holding mixed after the bell, off early session highs, short-end to intermediates underperforming. Curves remain flatter (2Y10Y -2.944 at -42.767) with the long end still outperforming. Currently, USZ3 trades 113-13 (+14), TYZ3 trades 107-15 (-2). Initial technical resistance for TYZ3 well above at 108-25 High Nov 3 and the next bull trigger. Initial support 107-08+ 20-day EMA.
- Tsy futures pared gains after this morning's UofM data: lower Sentiment (60.4 vs. 63.8 est) and Current Conditions (65.7 vs. 70.6 est), inflation expectations higher than estimated: 1 Yr (4.4% vs. 4.0% est) 5-10 Yr (3.2% vs. 3.0% est).
- As a word of caution, recall the Jun’22 preliminary report when 5-10Y expectations surprisingly jumped to 3.3% before being revised down to 3.1% in the finalized print. Powell noted that in last week’s FOMC conference when asking in Q&A. “I think the UM thing got blown out of proportion a little bit, it was actually a preliminary estimate that got revised away, and I said it was preliminary in it, but that didn't get picked up”.
- Projected rate cut chance into early 2024 holds near late Thursday lows: December at 2.4bp at 5.352%, January 2024 cumulative 5.9bp at 5.387%, while March 2024 pricing in -16.5% chance of a rate cut with cumulative at 1.8bp at 5.346%, May 2024 cumulative -6.9bp at 5.260%. Fed terminal at 5.385% in Feb'24.
- Slow start to the week ahead, focus on CPI Tuesday morning, CPI MoM (0.4% prior, 0.1% est), YoY (3.7% prior, 3.3% est)
