OIL: Crude Softening Amidst Ukraine Peace Talks, Easing Middle East Tensions
Feb-13 10:30
Crude softer as supply-side uncertainty eases against backdrop of imminent Ukraine peace talks and signs of softening Israel/Hamas tensions.
- Crude extended losses this morning after headlines suggested that tensions around the Gaza ceasefire deal had eased, with Hamas reaffirming its commitment to the hostage release deal.
- Israel had previously said that delays violated the ceasefire agreement and had placed its military on high alert.
- Softening tensions around the Gaza ceasefire deal lowers the risk of a wider regional conflict, which in the past has drawn Israel and Iran into direct conflict and added to supply-side uncertainty in oil markets.
- Crude had declined earlier as the market digested US President Trump’s confirmation that he talked to Russian President Putin yesterday, saying negotiations on the Russia-Ukraine conflict will begin imminently.
- A peace agreement could see US sanctions on Russia’s energy trade eased, reducing supply-side risks.
- Brent APR 25 down 1.4% at 74.09$/bbl, just under the Feb. 6 low.
- SUP 1: $74.10 - Low Feb 6
- SUP 2: $71.25 - Low Dec 20
- WTI MAR 25 down 1.5% at 70.3$/bbl, breaking through Feb. 6 low.
- SUP 1: $70.43 - Low Feb 6 and the bear trigger
- SUP 2: $68.05 - Low Dec 20 ‘24
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US INFLATION: MNI US CPI Preview: Still Too High For Comfort
Jan-14 10:15
Our preview of Wednesday's December CPI release has been published (PDF):
- Consensus sees core CPI inflation decelerating slightly to between 0.2 to 0.3% M/M in December, with MNI’s analyst review pointing to an average estimate of 0.24% so a bias toward a 0.2% rounded figure.
- Likely to be the single most closely watched individual aspect of Wednesday’s CPI report, rental inflation is expected to accelerate to an average figure that firmly rounds to 0.3% M/M in December.
- Supercore inflation is seen pulling back, though, to the upper 0.20s%, from 0.34% in November.
- If housing is our top pick to watch this month then core goods inflation – which is seen pulling back in December - is closely second, amid tariffs speculation.
- Initial estimates point to core PCE inflation at ~0.20% M/M, softer in outright terms but on a relative basis an acceleration from the softer 0.115% in Nov. That outlook will hinge partly on PPI data out Tuesday.
- It is clear that the Fed will hold in January, with the first plausibly “live” meeting not until March. But with pricing having shifted so quickly away from 2025 cuts, it’s a good juncture to assess whether markets have gotten too hawkish.
- Even in-line inflation readings could bolster the FOMC leadership’s confidence that they are on track to get PCE to 2%, and leave the door open to two rate cuts later this year, though this report is not widely expected to provide the requisite evidence.
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