OIL: Crude Weighs Impact of US Tariffs and Sanctions

Feb-14 07:32

Crude is set for a net weekly gain following a weaker dollar and delays to Trump’s reciprocal tariffs and supported by signs of tightening supply due to sanctions on Russia.

  • Signs of easing Israel/Hamas tensions and ‘imminent’ Ukraine peace talks had caused prices to pull back from a peak mid week.
  • President Trump signed a measure proposing tariffs on numerous trading partners, assessing tariffs on a country by country basis. Reciprocal tariffs will not go into effect today and are time-delayed until April 1, CNBC reports.
  • Floating Russian and Iranian barrels have hit multi-month highs on harsher U.S. sanctions as buyers fear pulling in cargoes.
  • 94 of the 154 active tankers sanctioned by the US on Jan. 10 are now idle, Bloomberg reports.
  • IEA projected a narrowing oil surplus with a modest revision in global oil demand growth up to average 1.1 mb/d in 2025, up from 870 kb/d in 2024 and with reduced output forecasts for Russia and Iran given US sanctions.
  • US diesel cracks have followed the crude market moves this week to continue a trend higher since late January while gasoline cracks have remained rangebound through the week.
    • Brent APR 25 up 0.5% at 75.42$/bbl
    • WTI MAR 25 up 0.5% at 71.63$/bbl
    • Brent APR 25-MAY 25 up 0.04$/bbl at 0.4$/bbl
    • Brent JUN 25-DEC 25 up 0.09$/bbl at 2.46$/bbl
    • US gasoline crack down 0$/bbl at 17.26$/bbl
    • US ULSD crack up 0$/bbl at 31.62$/bbl

Historical bullets

GILT AUCTION PREVIEW: 4.25% Jul-34 gilt

Jan-15 07:29
  • The DMO will return to the market this morning with GBP4.00bln of the 10-year 4.25% Jul-34 gilt on offer.
  • The GBP4.00bln nominal size is a bit larger than the other GBP3.75bln auctions of this gilt since its launch.
  • We have seen reasonably wide tails for this gilt which have ranged from 0.8-1.3bp and averaged over 1.0bp (when excluding the launch auction).
  • Given the recent volatility and slightly larger auction size there is scope for another relatively wide tail at today’s auction. Given recent moves this has a higher-than-usual potential to spook the market.
  • However, demand may be boosted a little as this is  the last auction of the 4.25% Jul-34 gilt ahead of the syndicated launch of a new 10-year gilt in February (we pencil in 11 February) – that new gilt will be reopened via auction on 12 March via auction.
  • Timing: Results will be available shortly after the auction window closes at 10:00GMT with a further GBP1.0bln available to successful bidders through the PAOF.

EQUITY TECHS: E-MINI S&P: (H5) Bear Threat RemainsPresent

Jan-15 07:29
  • RES 4: 6178.75 High Dec 6 and key resistance   
  • RES 3: 6163.75 High Dec 16  
  • RES 2: 6068.25/6107.50 High Jan 6 / High Dec 26 
  • RES 1: 5987.43 50-day EMA and a pivot resistance          
  • PRICE: 5866.50 @ 07:18 GMT Jan 15 
  • SUP 1: 5809.00 Low Jan 13        
  • SUP 2: 5784.00 Low Nov 4 
  • SUP 3: 5698.25 50.0% retracement of the Aug 5 - Dec 6 bull leg
  • SUP 4: 5658.00 Low Sep 12 ‘24

A bear threat in the S&P E-Minis contract remains present and short-term gains are considered corrective - for now. The reversal from the Dec 26 high, confirmed the end of the Dec 20 - 26 correction. 5866.00, the Dec 20 low and a key short-term support, has been breached. This strengthens a bearish theme and sights are on 5784.00, the Nov 4 low and an important short-term support. Initial pivot resistance is seen at 5987.43, the 50-day EMA.

BUNDS: Off the low Post UK CPI, a Busy day ahead

Jan-15 07:23
  • It was a very tight range for Bund overnight, but this was quickly broken after the UK CPI came below expectation, helping the contract jump 19 ticks to test a new intraday high.
  • Regardless of the early price action, the contract remains under serious pressure, after having lost 690 ticks from the 2nd of December high to Yesterday's low. a one way price action.
  • The German 10yr yield has cleared the July high Yesterday, and should again be quoted close to that level, equated to 130.47 Yesterday.
  • Investors will now be staring at the 2024 high printed in late May at 2.706%, this equated to 129.89 Yesterday.
  • Resistance will be at Yesterday's high of 131.09 initially.
  • Today sees, France, Spain Final CPIs, and of course the US CPI.
  • SUPPLY: UK £4bn 10yr (equates to 30.5k Gilt) should weigh into the bidding deadline, Germany 2053, 2054 (equates combined to 17.6k Buxl) could weigh.
  • SPEAKERS: ECB Lane, Guindos, Villeroy, Vujcic, Fed Kaskari, Williams, Goolsbee, BoE Taylor.