AMERICAS OIL: WTI crude is higher are edging higher today
WTI crude is higher are edging higher today after Thursday’s volatile trading amid uncertainty around tariffs and jawboning to get OPEC+ to increase output. President Trump turned his attention to OPEC+ pledging to increase production and followed news that the US Treasury secretary sanctioned an international network known to facilitate shipments of Iranian oil into China. The sanctions capture individuals, specific vessels and companies operating in China, UAE and India.
- Upside is limited by oversupply risks with the potential for increased production from OPEC+ while tariff risk weighs on global oil demand.
- Market tightness is showing signs of easing with the prompt WTI spread falling to the lowest since early December to a low of $0.21/bbl yesterday from briefly over $1/bbl at the start of the week.
- The Russian Urals prices has fallen below the $60/bbl price cap for the first time since December, Bloomberg said, with Argus data showing discounts as high as $16/bbl following US sanctions announced in January.
- Canada’s Trans Mountain oil pipeline, which enables export on the Pacific Coast to Asia, could fill to capacity as early as this year if tariffs are imposed, an executive said. The pipeline could add between 200k and 300kb/d of capacity.
- Diesel and gasoline cracks rose yesterday, supported by the drop in crude and following rises in implied demand data this week and ahead of the upcoming maintenance season.
- The US is likely to remain the world’s top crude producer for some time to come, according to shale executives cited by Argus.
- Exxon Mobil’s Baton Rouge, LA, refinery has shut its 110k b/d Pipestill 8 crude unit for turnaround, Bloomberg sources reported on Thursday.
- Prompt WTI crude time spreads are holding near the lowest since early December amid oversupply risks with President Trump pledging to increase production, the potential for more OPEC+ production and the tariff risk weighing on global demand.
- WTI MAR 25 up 0.8% at 71.14$/bbl
- US gasoline crack down 0.1$/bbl at 16.49$/bbl
- US ULSD crack down 0.1$/bbl at 30.48$/bbl
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BONDS: German Yields are through the next resistances
- With German Bund through 131.59, the Yield is testing 2.55%, and further out would see 2.60% next, this equates to 131.06.
- We noted earlier the 127.82 support in UBH5, which equated to the November high for the 30yr Yield at 2.753%, this is now being tested, printing a 2.758% high, highest since early July.
- French OAT has broken below the 122.00 figured, and the 10yr Yield will now be targeting the 2024 high in Yield.
PIPELINE: Council of Europe Dev Bank 5Y SOFR Launched
While domestic issuers have stepped receded after the record issuance since Monday ($96.5B), foreign bank and supra sovereign US$ issuance continues:
- Date $MM Issuer (Priced *, Launch #)
- 01/08 $6B *World Bank 7Y +54
- 01/08 $1.5B #CoE Dev Bank 5Y SOFR+42
- 01/08 $Benchmark NWB 5Y SOFR+50a
- 01/08 $Benchmark IADB 5Y SOFR+42a
- 01/08 $Benchmark Ontario 5Y SOFR+58
- 01/08 $Benchmark Kommunalbanken 5Y +48
- 01/08 $Benchmark Indonesia 5Y 5.65%a, 10Y 5.95%a
GILT TECHS: (H5) Downtrend Accelerates
- RES 4: 93.09 High Dec 20
- RES 3: 92.88 20-day EMA
- RES 2: 92.13/60 High Jan 7 / 3
- RES 1: 91.58 Intraday high
- PRICE: 90.48 @ 12:01 GMT Jan 8
- SUP 1: 90.29 Intraday low
- SUP 2: 90.00 Psychological round number
- SUP 3: 89.64 2.236 proj of the Dec 20 -27 - Jan 2 price swing
- SUP 4: 8943 2.382 proj of the Dec 20 -27 - Jan 2 price swing
The trend condition in Gilt futures is unchanged, it remains bearish and this week’s fresh cycle lows reinforces current conditions. Today’s sell-off highlights an acceleration of the trend and maintains the price sequence of lower lows and lower highs. Sights are on the 90.00 psychological handle. Initial resistance is at 91.58, today’s intraday high. Resistance at the 20-day EMA, is at 92.88, and the average is seen as an important hurdle for bulls.
