OIL: API Crude Inventory Report

Oil prices fell around 3% last week driven by progress towards a Ukraine peace deal, which the Europeans have said still needs a lot of work. Talks took place over the weekend between the US, Ukraine and Europe. One of Russia’s demands is that it is reintegrated into the global system, which would not only involve rejoining the G8 but also likely include an easing of sanctions which would increase already ample global oil supplies. Tight enforcement of current restrictions is unlikely, with those against Russian oil majors imposed on Friday, while talks are ongoing. 

• WTI fell 1.7% to $57.98/bbl to be down 4.3% in November, strengthening a bearish theme. It recovered to around $58.60 before then falling to a low of $57.38, holding above the bear trigger at $55.99. Initial resistance is at $61.84, 24 October high.
• Brent is down 1.4% to $62.51/bbl and 3.5% lower this month. It reached $63.10/bbl before declining to $61.87, above the bear trigger at $59.97. Initial resistance is at $65.95.
• Talks between the US and Ukraine/Europe are due to continue on Monday and if they go well President Zelenskyy could visit the US this week.
• Concerns that the US deal, which favours Russia, was inflexible have been calmed with President Trump saying that it was not final and Zelenskyy posting there are “signals that President Trump’s team hears us”. Europe, Canada and Japan voiced worries that Ukraine would have to give up too much. 

The overnight range was 156.20 - 157.19, Asia is currently trading around 156.60. The pair finally took a breather from its move higher last week. The price action looks pretty clear for now though and Japanese officials would have to do something extraordinary to change the narrative. The path of least resistance is now a higher USD/JPY and I suspect any dips back toward the 154-155 area would be used as buying opportunities. I feel they will have to show some sign of fighting this toward or above 160, but given the current inputs this could potentially go a lot higher than that. It will be interesting when we get the CFTC data back as I suspect real money would only just be starting to turn back to a short Yen position.

• MNI BOJ: Board Member Masu Notes That Rate Hike Is "Getting Closer". BOJ board member Masu tells Nikkei that the decision to raise interest rates is "getting closer". He notes that "I can't say what month it'll be, but in terms of distance, we're close". Masu also provided comments to Jiji in an interview released around an hour ago
• Bloomberg reports that the chief economist at Credit Agricole believes, “Takaichi to be proactive with Yen intervention and will intervene more actively in the foreign exchange market.”
• Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($1.07b),158.00($383m). Upcoming Close Strikes : 153.00($1.17b Nov 26), 154.00{$2.14b Nov 26), 155.00($1.86b Nov 26) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 103 Points

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

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