AMERICAS OIL: Americas End of Day Oil Summary: Crude Rises
US OIL: September 8 - Americas End of Day Oil Summary: Crude Rises
Crude prices have recovered much of Friday’s losses after a cautious 137k b/d increase in the OPEC output target from October. The risk of more sanctions on Russian crude after a strike on Ukraine is adding upside pressure.
- At a meeting yesterday, OPEC+ decided to start to unwind the new 1.66mb/d layer of halted oil production, which was scheduled to be in place until end-2026. Unwinding further cuts will depend on “evolving market conditions”.
- The OPEC+ decision to start gradually unwinding the 1.65mb/d cuts reflects the low OECD commercial stocks, according to Goldman Sachs cited by Reuters.
- A preliminary Reuters poll showed on Monday that US crude oil inventories fell by about 3 million barrels in the week to September 5. Analysts estimated distillate inventories decreased by about 1 million barrels last week, while gasoline stocks rose by about 1.2 million barrels. Refinery utilization was estimated to be down 0.9% from 94.3% of total capacity in the previous week.
- China’s stockpiling of oil, which has helped soak up excess global crude production this year, is likely to continue at a similar rate in 2026, Reuters reports citing Gunvor’s chief strategist.
- Russia launched its largest air attack of the war on Ukraine, setting the main government building on fire in central Kyiv.
- Ukraine attacked the Druzhba oil pipeline in Russia’s Bryansk region, the commander of Ukraine’s drone forces said on Sunday.
- EU officials are discussing potential sanctions against China and other third countries for purchasing Russian oil & gas, the FT reports.
- Diesel cracks continue the general trend higher amid refinery disruption after another report of a Ukrainian strike on a Russian facility though gasoline cracks are lower as US demand begins its seasonal decline.
- WTI Oct futures were up 0.6% at $62.25
- WTI Nov futures were up 0.7% at $61.88
- RBOB Oct futures were down 0.3% at $1.96
- ULSD Oct futures were up 1.1% at $2.31
- US gasoline crack down 0.8$/bbl at 19.94$/bbl
- US ULSD crack up 0.6$/bbl at 34.85/bbl
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AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 14:34 BST Aug 8
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed a poor NFP print. This keeps Aussie 10-year futures toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
SECURITY: Trump To Sign Trilateral Peace Accord With Armenia/Azerbaijan Shortly
US President Donald Trump is shortly due to sign a trilateral peace agreement with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at the White House. LIVESTREAM The event will provide another opportunity for Trump to style himself as peacemaker, after touting success in brokering peace deals between Rwanda/Congo, Cambodia/Thailand, and India/Pakistan.
- The accord aims to resolve a decade-long dispute over the sovereignty of Nagorno-Karabakh - a breakaway Azerbaijani province that was under de facto Armenian control from the dissolution of the Soviet Union until a 2020 war.
- Trump described the meeting on Truth Social as a “historic peace summit,” noting that the US will also sign “Bilateral Agreements [to] fully unlock the potential of the South Caucasus Region.”
- White House spokeswoman Anna Kelly told reporters that Trump would sign deals with both Armenia and Azerbaijan on energy, technology, economic cooperation, border security, infrastructure and trade.
- A White House official said: "It's about the entire region, and [the leaders] know that that region is known to be safer and more prosperous with President Trump."
- Reuters reports that the US will have development rights to build transportation links in the strategic Zangezur Corridor, a mountainous stretch of Armenian territory between Azerbaijan and its Nakhichevan exclave.
- Politico notes: “But whether this is just a photo opportunity or a lasting end to a conflict that has undermined stability in a region dominated by Russia and Iran will depend on whether the US can address several key challenges.”
FED: Balance Sheet Runoff Continues At Steady $20B/Month Pace (2/2)
Fed asset holdings were little changed in the past week. SOMA runoff totaled $2.8B (composed of $4.2B less nominal Tsy holdings and $1.4B more TIPS), with emergency lending/liquidity facilities $0.7B lower.
- Over the last 4 weeks, the $20B/monthly expected QT pace was roughly adhered to: MBS fell $18B, with Treasury net holdings down around $2B (a fall in TIPS holdings offsetting a slight rise in nominals).
- Discount window usage accounted for the fall in lending facility usage this week; takeup is now down to $4.9B, down $1.3B in the last month and down from the 1-year high of $6.4B set in July which looks to have been a temporary blip higher.
