OIL: OPEC+ Unwinding to Soften Middle East Market Structure: Kpler
Mar-14 14:11
The planned increase in supply from OPEC+ from April onwards and continued robust Iranian crude exports are likely to soften regional market structures in the near term, Kpler said
- This should result in a potential widening of the Brent-Dubai EFS spread compared to its current level.
- A widening of the Brent-Dubai EFS spread could inhibit west-to-east arbitrage opportunities, squeezing Europe-Asia crude flows.
- In Feb, the spread was narrower than usual, which raised North Sea- Asia flows to an 11-month high of 300k b/d in February, almost double month on month, Kpler data showed. Most of these were of the Johan Sverdrup grade.
- Kpler also expects that OPEC+ will unwind cuts from April onwards but will pause output expansion over the remainder of the year.
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GILTS: Futures Through Initial Support On U.S. CPI
Feb-12 14:06
Gilts sell off on the back of the U.S. CPI data.
- Futures as low as 92.33, breaking through the 20-day EMA (92.63).
- Our technical analyst’s next support of note isn’t seen until the Jan 24 low (91.52).
- Intermediate support seen before there at the 38.2% retracement of the move from the ’25 low to ’25 high (92.29), followed by the Jan 29 low (91.96)
- Yields 5-7bp higher, curve steeper.
- 10s still 4.5bp below next resistance at the Jan 29 high (4.622%).
- 10s 2bp wider to Bunds on the day, last 209.5bp.
- BoE-dated OIS showing 56bp of cuts through year-end vs. ~58bp seen ahead of the U.S. data.
- SONIA futures +0.25 to -4.5.
STIR: Effective Fed Funds Rate
Feb-12 14:03
FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $92B
- Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $278B
SECURITY: Return To Ukraine's Pre-2014 Borders "Unrealistic" - Hegseth
Feb-12 14:02
US Defense Secretary Pete Hegseth has stated at the first Ukraine Contact Group meeting since President Donald Trump returned to the White House, that although the US wants to see a "sovereign Ukraine," returning to Ukraine's pre-2014 borders is "unrealistic".
- Hegseth says Trump "intends to end the war through diplomacy". Adds that Ukraine's NATO membership should not be part of a peace plan and says "lower energy prices will help bring Russia to the table."
- Hegseth says, "as part of any security guarantee there will not be US troops deployed in Ukraine," noting that Europe needs to do more to cover the cost of Ukraine's security. Hegseth reiterates a Trump position that European NATO members should raise defence budgets to 5% of GDP - a target that only Poland is close to hitting.
- Hegseth says the US, "will no longer tolerate an unbalanced relationship," and says a greater division of labour needs to be struck so the US can prioritise other threats, including from China.
- Today's meeting is the first event in a flurry of diplomacy designed to kickstart peace talks. VP JD Vance will meet Ukrainian President Volodymyr Zelenskyy on Friday at the Munich Security Conference. Vance will be joined by Trump’s special envoy for Ukraine and Russia, Keith Kellogg, who is expected to travel onwards to Kyiv.
- Bloomberg reports Kellogg “plans to gather input” from Munich and Ukraine to “present Trump with options in the coming weeks to end the war”.
- US Treasury Secretary Scott Bessent will travel to Ukraine this week to discuss with Zelenskyy efforts to resolve the war and a plan for the US to secure access to critical minerals.
