AMERICAS OIL: Canadian Oil, Mars Prices Spike in USGC Market on Tariffs: BBG
Mar-04 19:04
Canadian Oil, Mars Prices Spike in USGC Market on Tariffs: Bloomberg
- Physical prices of heavy Canadian crude and medium sour Mars Blend produced in the US Gulf of Mexico spiked today as US President Trump’s tariffs and Venezuela sanctions redraw flows into one of the world’s largest refining centers.
- Canadian Cold Lake was quoted at a discount of $1.75/bbl to US WTI oil futures as of noon CT, up from -$3 Monday in the pipeline market; level is currently the highest since March 2022.
- Prices rallied as USGC refiners shy away from Mexican oil, favoring Canadian crude of similar quality, according to people with knowledge of the situation, who asked not to be named as they aren’t authorized to speak publicly.
- Mexico is the main supplier of crude oil to US refiners after Canada, providing ~500k b/d to USGC refineries.
- The Trump administration imposed tariffs of 25% on Mexican crude and 10% on Canadian crude. The duty on Mexican crude is equivalent to ~$17/bbl, a cost that needs to be fully absorbed by US refiners as Mexico can reroute oil to Asia and Europe.
- Prices of Mars Blend is at a premium of around $3 to US oil futures; if it holds up, it would be the highest since May 2020; on Monday, prices closed at +$2.10.
- In Alberta, Heavy Western Canadian Select (WCS) for April’s discount to WTI widened to $14.35/bbl, according to person familiar with prices. The discount closed at $13.75/bbl on Monday, according to General Index prices posted on Bloomberg.
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CANADA STILL CONSIDERING TAX ON OIL EXPORTS TO US- OFFICIAL
Feb-02 18:26
- CANADA STILL CONSIDERING TAX ON OIL EXPORTS TO US- OFFICIAL
FED: Powell To Deliver Semi-Annual Testimony In Mid-Feb
Jan-31 21:48
The House Financial Services Committee's website confirms that Fed Chair Powell will deliver his semi-annual Monetary Policy Report on Wednesday Feb 12 at 1000ET.
- The Semi-annual testimony will be closely eyed as Powell's first scheduled appearance since the January FOMC - and the House testimony on the 12th is the same day as the release of January CPI (and the week after nonfarm payrolls and benchmark revisions) so will be of particular interest.
US OUTLOOK/OPINION: Nonfarm Payrolls, Revisions Highlight Next Week In US Macro
Jan-31 21:39
Friday’s nonfarm payrolls for January highlights the US macro week. It's a highly anticipated report that could alter recent trends considering it will include annual benchmark revisions along with seasonal factors and an updated birth-death model.
- The preliminary estimate for the benchmark revision pointed to the level of payrolls being some 818k lower than currently reported for back in March 2024. There’s a broad expectation from what we can gather that the hit seen next week won’t be as large but it could still be significant. We also watch the seasonal revisions closely, as whilst they should have a zero-sum impact over the calendar year, we’ve noted some particularly favorable seasonal factors in recent months that have biased seasonally adjusted jobs growth higher.
- With these considerations in mind, the early days of the Bloomberg consensus points to nonfarm payrolls growth of 150k after a solid three-month average of 170k. Note that the unemployment rate from the separate household survey won’t be affected by these revisions, having already seen its own seasonal factor revisions last month. A population control will complicate month-on-month changes in the levels of employment and unemployment but shouldn’t be significant for the rate, which is seen unchanged at 4.1% having surprised lower with 4.09% in December. The recent high is technically 4.23% in November having first popped to 4.22% back in July.
- Two other special mentions for the week are: 1) rare remarks from FOMC Vice Chair Jefferson speaking on the economic outlook and monetary policy late on Tuesday with both text and Q&A, having last spoke on Oct 9. 2) ISM services on Wednesday after its priced paid series jumped 5.9pts to 64.4 in December for the highest since Feb 2023.
- Away from macro but still material, the coming week brings the US Treasury's quarterly refunding process - our preview is here.
