OIL PRODUCTS: China Road Fuel Output Cuts to Continue Through 2030: JLC
Dec-10 09:23
China’s cuts to gasoline and diesel output to tackle overcapacity is expected to slow next year, but will continue through at least 2030, according JLC cited by Bloomberg.
- China’s total refining capacity this year is expected to decline 1.3% year on year to 969m tons. Overall refining expansion is set to slow next year despite the scheduled start of Huajin-Aramco’s 16m-ton/yr petrochemical complex.
- Gasoline production in 2026 is expected to fall 1.4% year on year compared with a decline of 5.2% this year.
- Diesel output is expected to fall 0.6% in 2026, compared with a decline of 8% in 2025.
- Jet fuel is expected to dip in 2027 but may rebound in 2028-2029.
- State-owned refiner run rates in Jan-Oct were cut to 82% and private refiners to 52% amid lower product prices. Domestic wholesale gasoline price was down 5% on the year and diesel down 4.8% by early Dec.
- China is set to raise overseas shipments next year after reduced exports this year due to thin trading margins across Asia.
Source: Bloomberg Finance L.P.
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GOLD: Rallying, Outperforming Fundamental Inputs
Nov-10 09:20
A weaker USD supports gold, with spot trading ~$80/oz higher at $4,079/oz.
- Resistance at the October 31 high ($4,046.2/oz) has been breached, switching focus to the October 22 high ($4,161.4/oz).
- Our technical analyst had stressed that the recent pullback in bullion seemed corrective.
- Note that the move in gold seems somewhat larger than is justified by the degree of weakness witnessed in the greenback.
- Some have pointed to tentative steps towards the reopening of the U.S. government as a dovish signal (as it moves us closer to the resumption of official U.S. data releases, which could embolden Fed easing).
- However, this is at odds with the hawkish adjustment seen in the U.S. short end through early Monday trade.
- A reminder that long gold was one of the favoured trades until the pullback seen in recent weeks.
- Today’s move could simply reflect ongoing positive sentiment towards gold (magnified when there are gold-positive developments), helping to at least partially explain the outperformance vs. the fundamental inputs
- Elsewhere, recent headlines note that the Shanghai Gold Exchange is set to waive transactions fees for some gold contracts from tomorrow until the end of ’26, a marginal gold positive.
SONIA OPTIONS: H6 Package Trades
Nov-10 09:17
SFIH6 96.45/96.75 call spread vs. 96.30 puts paper paid 1.5 on 3.3K.
SONIA OPTIONS: Put Spread Package Trades
Nov-10 09:05
SFIZ5 96.20/96.10 put spread vs. 0NZ5 96.50/96.40 put spread, paper paid 0.25 on 4.5K (+SFIZ5, -0NZ5).
