OIL: Oil End of Day Summary: Crude Slightly Up
Mar-19 18:25
Brent is slightly higher on the day, having recovered earlier losses below $70/bbl, as the market digests the potential impacts of yesterday’s Putin/Trump call, rising US stocks, and re-remging tensions in the Middle East.
- WTI APR 25 up 0.3% at 67.08$/bbl
- Russia’s president Putin only agreed to a partial ceasefire, and an end to the war and sanctions is likely some way off.
- The Trump/Putin talks potentially incrementally reduced the probability of near-term tightening in Russia sanctions, according to Goldman Sachs.
- Trump Gave Iran A Two-Month Deadline For Reaching Nuclear Deal - Axios:
- US crude inventories rose slightly more than expected by 1.75mbbl despite a rebound in exports back up to 4.6mb/d and higher refinery utilisation, but with a large 1.4m change in the adjustment figure.
- EIA Weekly US Petroleum Summary - w/w change week ending Mar 14
- Crude stocks +1,745 vs Exp +535, Crude production -2, SPR stocks +275, Cushing stocks -1,009
- The Fed held rates at 4.25%-4.5% and sees two cuts this year. There were significant downgrades to the GDP growth forecast in 2025, largely as expected, though the weakness forecast in 2026-27 is something of a surprise.
- Trans-Niger pipeline has resumed operations after a temporary shutdown caused by a recent explosion and fire. Renaissance energy has no plans to declare force majeure on Bonny Light.
- The non sanctioned Panama-flagged Daban VLCC unloaded a cargo at a Chinese port last week, following STS transfers from three smaller sanctioned tankers, Reuters said.
- Oil platforms and oil export terminals in Mexico have resumed operations, having previously been suspended owing to bad weather, according to Bloomberg.
- Goldman Sachs has cut its oil price forecast by $5/bbl to $65-80/bbl.
- MNI Commodity Weekly: Middle East and Iran Back in Focus: Full piece Click Here
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FOREX: JPY Extends Session Gains, GBPUSD Set to Close Above 1.26
Feb-17 18:19
- The USD index has spent Monday consolidating its most recent decline near two-month lows. The Japanese yen continues to be the best performing G10 currency on Monday, slowly grinding higher in a subdued session owing to the US President’s Day holiday. As such, USDJPY has declined 0.60%, and sits 100 pips off the overnight highs at 151.40. Price action has steadily narrowed the gap to key support and the bear trigger, which remains unchanged at 150.93, the Feb 7 low. Clearance of this level would resume the bear cycle that started on Jan 10.
- In similar vein, EURJPY’s technical resistance at the 50-day EMA has remained intact, and losses in 2025 now total 2.5% in 2025. Renewed weakness would refocus attention on 155.61, the Feb 10 low and bear trigger. Below here, the August and September lows from last year also mark important medium-term parameters, at 154.41 and 155.15 respectively.
- A bull cycle remains in play for GBPUSD, and spot looks set to close at its highest level for two months, above the 1.2600 handle. Recent gains have resulted in a move above both the 20- and 50-day EMAs, and a continuation higher would open 1.2767, the 50.0% of the Sep 26 ‘24 - Jan 13 bear leg retracement.
- Last week, we noted AUDUSD’s first close back above the 50-day EMA since October last year. Since then, the pair has extended higher, eroding the FOMC-induced decline on Dec 18, and now reaching a fresh 2-month high at 0.6374. Above here, 0.6384 (Dec 13 high) and 0.6429 (Dec 12 high) remain the most notable short-term targets for the move. A stronger rally would open 0.6471, the Dec 9 high.
- Developments are significant given the RBA is expected to cautiously ease policy overnight and lower the cash rate by 25bps to 4.10%. Elsewhere, UK labour market and German ZEW data re due, before Canada CPI highlights the North American docket.
EGBS: Defense Spending Expectations Weigh, Germany Underperforms
Feb-17 18:04
- EGBs closed lower across the curve, led by a sizeable sell-off in Bunds at the open on the back of higher defense spending expectations in the event of a US-brokered peace deal between Russia and Ukraine.
- Those moves mainly held for German paper, keeping to a narrow range as 10Y yields didn't want to retreat too far after an unsuccessful attempt to push above 2.50%.
- Other major EGBs saw a greater paring of those early losses however, with spreads more than reversing Friday’s widening with support from the EuroStoxx 50 climbing 0.5%.
- BTP-Bund spreads saw the most notable tightening, to 105.8bps (-3.2bp) and close to Thursday’s 105.5bp that marked fresh recent lows.
- Germany 2Y +2.3bps & 10Y +5.7bps, France 2Y +1.2bps & 10Y +3.8bps and Italy 2Y -0.4bps & 10Y +2.6bps.
- Swap spreads: Long-end German ASWs meanwhile have more than reversed Friday’s widening, with the Bund ASW vs. 3-month Euribor 4bp tighter and the Buxl ASW 4.5bp tighter.
- The prospect of debt brake reform following the election result (the probability of which depends on the eventual composition of the Bundestag) presents a key near-term risk to ASWs, even if the implementation of any reforms would likely take some time.
- We pencil in a 30-year Bund syndication for this week but our conviction is increasingly waning ahead of the election.
- ECB speak has seen pre-eminent hawk Holzmann viewing “some” probability of a March rate cut, sufficiently loose compared to the 98% of a 25bp cut priced to have seen Germany 2Y yields rise 1bp post-comments.
- Bundesbank’s Nagel meanwhile noted a tariff scenario where the level of German GDP would be circa 1.5pps lower by 2027.
- ECB Executive Board Member Cipollone will peak on the ECB's balance sheet at an MNI Event tomorrow at 1400GMT/1500CET (sign up here).
EURUSD TECHS: Key Resistance Remains Exposed
Feb-17 18:00
- RES 4: 1.0630 High Dec 6
- RES 3: 1.0594 Dec 9 ‘24
- RES 2: 1.0533 High Jan 27 and a reversal trigger
- RES 1: 1.0514 High Feb 14
- PRICE: 1.0481 @ 15:41 GMT Feb 17
- SUP 1: 1.0393 20-day EMA
- SUP 2: 1.0280/0141 Low Feb 10 / 3 and the bear trigger
- SUP 3: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 4: 1.0031 2.00 proj of the Sep 25 - Oct 23 - Nov 5 price swing
EURUSD is holding on to its recent gains. A short-term bull theme remains intact and last week’s gains have reinforced current conditions. The move higher also strengthens a short-term reversal signal on Feb 3 - a hammer - and suggests scope for an extension near-term. The pair has breached the 50-day EMA, at 1.0430. This has exposed 1.0533, the Jan 27 high. Initial firm support lies at 1.0280, the Feb 10 low.
