AMERICAS OIL: WTI crude is edging lower today with rising US crude inventories
Feb-12 12:24
WTI crude is edging lower today with rising US crude inventories and oversupply concerns combined with a slightly stronger USD index (+0.1%) to limit upside pressure. Rising Middle East tensions and risks of sanctions tightening supplies have been supporting oil markets as the market weighs the impact of US tariffs.
- Israeli Prime Minister Benjamin Netanyahu has warned of a "return to intense fighting" if Hamas does not return Israeli hostages by Saturday.
- Russia’s seaborne crude shipments fall suggesting further signs of disruption after the latest US sanctions announced on Jan. 10, although also impacted by weather, according to Bloomberg vessel tracking.
- The EIA STEO increased its expectations of excess supply in 2025 and 2026 with global oil demand in 2025 stable at 104.1mb/d. OPEC’s monthly report is published today and the IEA’s on Thursday.
- EIA US crude inventories are today expected to show a build of 2.5mbbl and with a small build for gasoline and small draw for distillates. Flows from Canada to the US have been rising ahead of potential tariffs. API data yesterday showed a large crude stock build of 9mbbl, according to Bloomberg. Gasoline stocks fell 2.5mbbl and distillates fell 0.6mbbl.
- January US CPI is due today and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1%
- API reported crude stocks rose 9mbbl last week; Cushing stocks rose 0.4mbbl, gasoline fell 2.5mbbl, distillates fell 0.6mbbl.
- EU trade ministers will hold an emergency meeting this afternoon to discuss Trump’s metal tariffs.
- Global crude stocks have fallen to the lowest level since at least January 2017 at 3.240mbbl in early February, according to Kpler.
- Diesel and gasoline cracks are higher on the day amid ongoing trade tensions and ahead of an active spring maintenance season.
- WTI MAR 25 down 1.1% at 72.51$/bbl
- US gasoline crack up 0.2$/bbl at 17.31$/bbl
- US ULSD crack up 0.3$/bbl at 32.70$/bbl
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OUTLOOK: Price Signal Summary - Bund Bears Still In The Driver's Seat
Jan-13 12:22
- In the FI space, the trend in Bund futures remains bearish and last week’s extension reinforces this theme. The contract has cleared key support at 132.00, the Nov 6 low. The breach strengthens a bearish theme and sights are on the 130.00 handle next. Key short-term resistance is at 133.26, the 20-day EMA. Gains would be considered corrective and allow an oversold condition to unwind. First resistance is at 131.71, the Jan 9 high.
- The trend condition in Gilt futures is unchanged, it remains bearish and last week’s fresh cycle lows reinforce current conditions. The latest move down also highlights an acceleration of the trend. Sights are on 88.87 next, a 2.764 projection of the Dec 20 -27 - Jan 2 price swing. Initial resistance is at 90.31, last Thursday’s intraday high. Resistance at the 20-day EMA, is at 92.13. The EMA is seen as an important hurdle for bulls.
GBP: Cable tests 1.2100
Jan-13 12:17
- With Cable testing the 1.2100 figure, immediate attention will now turn to 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing.
- GBPUSD has so far printed a 1.2100 low.
FOREX: Analyst FX Views Amid Strengthening USD Trend
Jan-13 12:03
- *Goldman Sachs expect the dollar to rally by about 5% over the coming year on the realization of new tariffs and continued US outperformance. Even with this upgrade, GS still see the risks tilted towards more dollar strength, and are extending the target on their long USDSEK trade recommendation to 11.60, in line with our new 3m forecast, (revised stop to 11.00).
*ING think the defensive currencies of JPY & CHF can outperform on the crosses, while commodity and emerging currencies should take the brunt of the higher US rate story. Indeed, AUDUSD is not far from 0.60, where we could start to hear speculation over impending RBA intervention. - *SocGen: There is, in sum, a lot of US exceptionalism, and a lot of monetary policy divergence, already ‘in the price’. That, however, won’t stop the market overshooting. The current Bloomberg survey consensus forecast is for EURUSD to be at 1.04 at mid-year, could easily become a consensus forecast that we will be below parity.
- *BofA: Potentially higher trade uncertainty and relative monetary policy keep BofA cautious on EUR in the near term. But they are also getting concerned Euro area bearishness per se is getting "stretched", and some positions could get squeezed. EURJPY lower remains their preferred bearish EUR expression, while also favouring EURCAD downside, partly on their quant signals.
- *JP Morgan Tech: A break below 1.02 in EURUSD turns JPM's attention to the next support that includes the 1.009 Nov 2022 pattern breakout and then the 0.9909 Sep 2022 78.6% retrace.
- *MUFG: Even if there was a second consecutive month of softer US inflation it is difficult to see it triggering a significant dovish repricing of Fed rate hike expectations at the current juncture and reversal of US dollar strength given inflationary fears related to Trump’s policy agenda.
- *Rabobank: Heightened expectations of a February BoE rate cut would likely put the GBPUSD 1.20 level in view. Rabo have brought forward their forecast of GBP1.20 to a 1-to-3-month view (from 6 months).
