OIL: Canadian Reopening After Fires Drives Oil Lower, US Steel Tariffs Rise
Oil prices are lower after rising over 4% in the last two days as US 50% steel and aluminium tariffs come into effect. Rain is also helping to bring fires in Canada’s oil sands region under control. WTI is down 0.4% to $63.13/bbl, close to the intraday low, but still above the 5-day EMA at $62.47. Brent is 0.4% lower at $65.36/bbl, just above resistance at $65.28. The USD index is slightly higher.
- Fires shut down around 350kbd or 7% of Canadian output, according to Bloomberg, which is close to the 411kbd increase OPEC agreed last weekend. The development helped drive oil prices higher this week but one producer has now reopened production.
- As the US increases its import tariffs on steel and aluminium today, the OECD revised down its 2025 growth forecast by 0.2pp to 2.9% a slowdown from 2024’s 3.3%. Oil markets have been concerned about the impact on global energy demand from the increase in trade protectionism.
- Bloomberg reported that there was a crude destocking of 3.29mn barrels last week, according to people familiar with the API data. Product inventories rose strongly with gasoline up 4.73mn and distillate +761k barrels. The official EIA data is out today.
- Later the Fed’s Cook & Bostic and ECB’s Machado appear. The BoC is expected to leave rates at 2.75%. US May services ISM/PMI, May ADP employment and May European services PMIs print. The focus remains on Friday’s US payrolls.
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BOBL TECHS: (M5) Monitoring Support
- RES 4: 120.20 High Dec 12 ‘24 (cont)
- RES 3: 120.000 Psychological round number
- RES 2: 119.960 High Apr 7 and the bull trigger
- RES 1: 119.780 High Apr 22
- PRICE: 119.110 @ 05:56 BST May 5
- SUP 1: 119.072 20-day EMA
- SUP 2: 118.622 50-day EMA
- SUP 3: 118.060 Low Apr 10
- SUP 4: 117.680 Low Apr 9 and a key support
A bull cycle in Bobl futures remains in play and the steep sell-off between Apr 7 - 9 is considered corrective. The early April rally resulted in a break of key resistance at 119.040, the Feb 28 high, strengthening bullish conditions. The focus is on the 120.000 handle next. On the downside, firm support lies at 117.680, the Apr 9 low. The 20-day EMA, an important short-term support, is at 118.996.
ASIA STOCKS: Mixed Day with Key Markets Closed
With the larger markets of South Korea and China out today for public holidays, those bourses open were mixed as currencies were the focus. Ongoing USD weakness saw regional currencies perform strongly with several up over 1% today.
- Despite a very strong day for the TWD, the TAIEX started the week on the backfoot down -0.75% today, following on from last week’s strong gains.
- In Malaysia, the FTSE Bursa Malaysia KLCI fell -0.45% following posting strong positive gains last week.
- The Jakarta Composite was up +0.50% following three successive weeks of very strong gains.
- Singapore’s FTSE Straits Times delivered modest gains of +0.10% as did the PSEi in the Philippines which rose +0.25%.
- India’s NIFTY 50 has enjoyed strong inbound FDI of late and lasts week rose +1.28% to mark three successive weeks of gains and has started this week off strongly up +0.50%
EURUSD TECHS: Corrective Cycle Remains In Play
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- PRICE: 1.1337 @ 05:57 BST May 5
- SUP 1: 1.1264 20-day EMA and a key support
- SUP 2: 1.1144 High APr 3
- SUP 3: 1.1036 50-day EMA and a pivot level
- SUP 4: 1.0805 Low Apr 3
A corrective cycle in EURUSD remains in play. The trend structure is unchanged, it remains bullish. MA studies are in a bull-mode position signalling a dominant uptrend, and the latest move down is allowing an overbought condition to unwind. A resumption of gains would open 1.1608, the Nov 9 2021 high. Initial key support to watch is the 20-day EMA, at 1.1264. A break of this average would signal scope for a deeper pullback.
