AMERICAS OIL: WTI crude is set for a net weekly gain following a weaker dollar
Feb-14 12:24
WTI crude is set for a net weekly gain following a weaker dollar, delays to Trump’s reciprocal tariffs and supported by signs of tightening supply due to sanctions on Russia. Bessent’s comments that the US could sanction Russian energy further and that the US wants to cut Iranian oil exports also supportive.
- 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 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.
- India seeks to boost US oil & gas imports after Trump-Modi meeting yesterday, in order to reduce the trade imbalance and avoid retaliatory tariffs.
- Mexican oil imports fell to their lowest monthly level on record in January, averaging just 535 kb/d, a decline of 400 kb/d m/m according to Kpler vessel tracking.
- Trump’s tariff reversal supporting Canadian crudes with WCS trading at a discount of $13.9/bbl to WTI since tariffs were delayed, a slight improvement from $14.9/bbl the previous week. Mexican crude diffs were also supported with Maya diffs to WTI Houston improved by 50 cents/bbl to a discount of $7.72/bbl.
- US Treasury Secretary Scott Bessent said he wants to cut Iranian oil exports to 100 kb/d and, if Trump directs, he will further sanction Russian energy.
- WTI MAR 25 up 0.6% at 71.72$/bbl
- US gasoline crack down 0.2$/bbl at 17.12$/bbl
- US ULSD crack up 0.4$/bbl at 31.95$/bbl
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US DATA: Mortgage Applications Jump Despite Rates At Highs Since May
Jan-15 12:18
- MBA composite mortgage applications jumped 33% (sa) last week, in the first full week for the year, after a four-week cumulative decline of 25% primarily seen in the last two weeks of December.
- Refis jumped 44% on the week vs -36% over that same four-week period, whilst new purchase applications jumped 27% after a cumulative -18%.
- It’s a strong start to the year but seasonal adjustment can be difficult around the festive period and it’s worth remembering that composite applications are still only 48% of 2019 averages (purchases 63%, refis 33%).
- It comes despite the 30Y conforming rate increasing another 10bps to 7.09% for its highest since May 2024, up from a recent low of 6.19% in late September.
- In a further sign of some relative easing in lending standards, the regular to jumbo spread pushed higher again last week, with the regular rate (7.09%) pushing above the jumbo rate (7.05%) for the first time since Nov 2023.
OUTLOOK: Price Signal Summary - Trend Structure In Bunds Remains Bearish
Jan-15 12:18
- In the FI space, the trend in Bund futures is unchanged, it remains bearish and Tuesday’s fresh cycle low reinforces this theme. The contract has cleared key support at 132.00, the Nov 6 low. The clear break of this level strengthens a bearish theme. Sights are on the 130.00 handle next. Key short-term resistance is at 132.78, the 20-day EMA. Gains would be considered corrective.
- The trend condition in Gilt futures is unchanged, the direction remains down and last week’s fresh cycle lows reinforce current conditions. Recent weakness 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, the Jan 9 high. Resistance at the 20-day EMA, is at 91.61. The EMA is seen as an important hurdle for bulls.
FRANCE: Bayrou Government Looks Set To Survive Censure Vote On Thursday
Jan-15 12:00
PM Bayrou’s government looks set to survive a censure vote on Thursday, alleviating some short-term widening risks in OATs against EGB peers. However, medium-term fiscal and political risks remain prevalent in France, limiting the case for OAT outperformance at this stage. OATs continue to underperform PGBs and SPGBs year-to-date, with the 10-Year SPGB/OAT/PGB butterfly currently at 53bps (vs 52bps yesterday and a cycle closing low of ~56.5bps).
- Bayrou’s address attempted to placate parties across the political spectrum. As a partial concession to the left, Bayrou announced a renegotiation of the 2023 pension reform. Local media has reported that the first debates on this topic will begin on Friday.
- Bayrou also advocated for a move towards proportional representation at the next legislative elections – a notion supported by the right-wing Rassemblement National party.
- The Bayrou government will target a 2025 fiscal deficit of 5.4%. This was at the upper end (though still within) the 5.0-5.5% range touted by Finance Minister Lombard last week. Budget Minister Montchalin has said this will entail E53bln of savings. Montchalin noted this morning that a budget will aim to be presented by the end of January.
- A reminder that ex-PM Barnier’s budget proposal entailed a 5% deficit and E60bln of savings.
- The far-left LFI party proposed a no-confidence motion against the government following the speech (as expected), which will be debated tomorrow at 1500CET and voted on at around 1730CET. It is not expected to succeed in ousting Bayou.
