OIL: Crude Edges Higher After Breaking Through Support Levels Yesterday
Crude oil prices are moderately higher aided by better risk appetite after breaking through key support levels yesterday. The negative impact of increased trade protectionism and OPEC+ plans to return output from April continues to weigh on prices.
- The US trade picture remains unclear with some Canadian automakers being exempted from the latest tariffs while reciprocal taxes are scheduled to go ahead from April 2. Mexico is scheduled to announce its retaliatory measures on March 9.
- Canadian oil producers are making alternative plans with Alberta looking to build a pipeline to the coast so that it can export crude outside North America.
- US Gulf refiners are placing fewer orders for crude from Mexico even ahead of tariffs with a 17% drop in March loading from February.
- EIA data yesterday showed US crude inventories rose more than expected by 3.6mbbl driven by a decline in refinery runs and despite a small drop in imports. Refineries cut utilisation to 85.9% to partially reverse the increase seen the previous week. Cushing stocks continued the recover from the low levels earlier in the year.
- Diesel cracks rebounded late yesterday to reverse previous losses as the market weighs demand concerns and following higher-than-expected US stock draws.
- Brent MAY 25 up 0.8% at 69.86$/bbl
- WTI APR 25 up 0.8% at 66.86$/bbl
- Brent MAY 25-JUN 25 up 0.02$/bbl at 0.42$/bbl
- Brent JUN 25-DEC 25 up 0.06$/bbl at 1.78$/bbl
- US gasoline crack down 0.1$/bbl at 23.18$/bbl
- US ULSD crack up 0.1$/bbl at 27.83$/bbl
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USD: A volatile session for FX
- The Dollar is in the Green across the board, Tariff and deadline headlines dominate in Global markets going into the European session.
- The Kiwi was and still is the worst performer today, but the NZDUSD is some way short of 0.5516, Yesterday's low.
- This is a big support area level, since 0.5512 is the 2022 low and the lowest printed level since March 2020.
- The most traded Global pair is recovering some of its earlier losses, EURUSD is slowly edging back above 1.0300, after it exchanged hands at its worst level since November 2020 Yesterday at 1.0141.
- While it tested a 1.0350 overnight, the initial resistance will be eyed at 1.0387 20-day EMA.
GOLD TECHS: Northbound
- RES 4: $2917.5 - 1.764 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 3: $2900.0 - Round number resistance
- RES 2: $2867.5 - 1.50 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 1: $2845.2 - 1.382 proj of the Nov 14 - Dec 12 - 19 price swing
- PRICE: $2811.1@ 07:23 GMT Feb 4
- SUP 1: $2736.4/2692.6 - 20- and 50-day EMA values
- SUP 2: $2656.9 - Low Jan 13
- SUP 3: $2614.8 - Low Jan 6
- SUP 4: $2583.6 - Low Dec 19 and a key support
A bull cycle in Gold remains in play. Last week’s extension higher and Monday’s gains confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2845.2 next, a Fibonacci projection. The first key support to watch is $2692.6, the 50-day EMA. The 20-day EMA is at $2736.4.
OAT: SocGen Remain Cautious
Societe Generale note that “while our economists do not expect the French government to collapse at this stage, more challenges lie ahead.”
- They go on to suggest that “although investors' risk aversion towards OATs has diminished, we believe it is prudent to be defensive and consider re-entering OAT shorts if the OAT-Bund spread decreases to 70bp.”
- Looking ahead, they believe that “additional supply pressure and the potential for credit rating downgrades in H225 should counterbalance still relatively strong domestic and offshore demand for OATs.”
