AMERICAS OIL: API Estimates Crude Draw for Dec 3rd report

In local morning trade, NZGBs are unchanged after US tsys finished Friday with modest gains across the curve (flat to 3bps richer). 

• US equities ended the month on a positive note. Earnings season remains in focus for investors. The vast majority of the 60% of S&P firms that have reported results so far have exceeded analyst estimates, according to Bloomberg.
• Kansas Federal Reserve President Schmid said he voted against the decision to reduce rates by 25bp last week due to concerns about inflation.
• NZ home-building approvals rose 7.2% m/m in September versus revised +6.1% in August.
• The key event in NZ this week is the Q3 labour market and wages data released on Wednesday. Filled jobs for the quarter signal a stabilization, but employment is likely to have remained weak, with consensus forecasting it to rise only 0.1% q/q to be still down 0.2% y/y. The unemployment rate is expected to rise 0.1pp to 5.3%, in line with the RBNZ’s August projections. Soft labour demand is likely to weigh on private wage growth, which is forecast to rise around 0.4% q/q after 0.6%.
• RBNZ dated OIS pricing is little changed across meetings. 23bps of easing is priced for November, with a cumulative 30bps by February 2026.

Oil prices were cautiously higher on Friday ahead of OPEC+’s 2 November meeting. It decided to increase production targets by 137kbd from December, as expected and in line with October/November, but then pause through Q1. This is the first halt since it began to unwind previous output cuts in April and the market is likely to be relieved by the decision with 2026 expected to see an increasing surplus. 

• OPEC+’s decision is strategically timed as Q1 usually sees lower demand. It will also give the group time to assess the size of widely expected excess demand and how new sanctions on Russian oil majors Rosneft and Lukoil impact the country’s exports.
• The impact of OPEC’s planned output increases has been unclear given that outside of Saudi Arabia there is little spare capacity. Some members had been overproducing anyway and now their quotas have caught up.
• Non-OPEC supply has also been rising driven by the US. Global supply flows appear very high given the elevated level of oil currently at sea, according to Bloomberg. The IEA projects excess supply of 3mbd in Q4 with it rising in 2026, which is likely to keep a lid on oil prices and discourage production and investment as a result.
• WTI rose 0.5% to $60.88/bbl on Friday to finish October down 1.7%. It reached a high of $61.38 after breaking below $60 briefly. Gains continue to be seen as corrective with the bear trigger at $55.96. Initial resistance is at $62.59, 24 October high.
• Brent (Jan ’26) increased 0.3% to $64.77/bbl after an intraday peak of $65.15 and ended the month 1.6% lower. Initial resistance is at $65.98, 9 October high, with the bear trigger at $59.97.

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There are diverging thoughts on the China economy, given the moderation of 3Q GDP.  Some see it as a weak recovery, whilst other see it as a moderation from a higher-than-expected Q2.  This divergence is playing out in the valuations between onshore and offshore as the Hang Seng lags the CSI 300 in valuations, falling again last week and with its P/E now below year end expectations and is approaching a key technical resistance level.