OIL: Crude Backwardation Strong Despite Softer Front Month
Dec-20 10:45
Crude front month extends the weekly decline to reverse much of gain seen the previous week, but crude curve backwardation remains strong suggesting supplies remain tight.
- Near term crude time spreads are trading towards the high for the month supported by the OPEC+ production hikes until April and supply risks due to increased sanctions on Russia and Iran.
- Oil front month futures are under pressure from the potential for less US Fed rate cuts in 2025, US dollar strength this week and bearish sentiment from mixed Chinese data and 2025 oversupply fears.
- The Brent prompt spread approached the highest since late November up to $0.44/bbl yesterday compared to a recent low of $0.27/bbl on Dec. 10.
- The longer term Jun24-Dec24 spreads are also trading near the high end of the range since September with Brent to a high of $1.47/bbl yesterday.
- Brent FEB 25 down 0.9% at 72.2$/bbl
- WTI FEB 25 down 1% at 68.68$/bbl
- Brent FEB 25-MAR 25 down 0.02$/bbl at 0.41$/bbl
- Brent JUN 25-DEC 25 down 0.12$/bbl at 1.35$/bbl
- WTI FEB 25-MAR 25 down 0.05$/bbl at 0.38$/bbl
- WTI JUN 25-DEC 25 down 0.1$/bbl at 1.56$/bbl
Source: Bloomberg
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GERMAN AUCTION RESULTS: 0% Aug-52 / 1.80% Aug-53 Bunds
Nov-20 10:34
| 0% Aug-52 Bund | 1.80% Aug-53 Bund | |
| ISIN | DE0001102572 | DE0001102614 |
| Total sold | E1bln | E1bln |
| Allotted | E818mln | E804mln |
| Previous | E0.808bln | E0.814bln |
| Avg yield | 2.51% | 2.55% |
| Previous | 2.55% | 2.44% |
| Bid-to-offer | 1.97x | 2.93x |
| Previous | 1.48x | 1.66x |
| Bid-to-cover | 2.41x | 3.65x |
| Previous | 1.83x | 2.04x |
| Avg price | 50.24 | 84.80 |
| Low price | 50.19 | 84.79 |
| Pre-auction mid | 50.164 | 84.744 |
| Prev avg price | 49.38 | 86.93 |
| Prev low price | 49.37 | 86.92 |
| Prev mid-price | 49.311 | 86.860 |
| Previous date | 17-Jul-24 | 18-Sep-24 |
BONDS: The Euribor strip and the Schatz test session highs.
Nov-20 10:30
- Watch the shorter end here, the Euribor strip is getting lifted, with the Front Month leading, ERZ4 seems to have been bought in over 13k, the strip test the intraday high, with Schatz on the follow.
- The 3 Months Euribor fix was lower, but there was no immediate reaction on it 25 minutes ago.
EGBS: Tight Range For Bund Futures This Morning, Bund Supply At 1030GMT
Nov-20 10:28
Bund futures have traded in a 36 tick range this morning, currently -28 ticks at 132.05. Initial support in Bund futures is seen at 131.68/131.66 (circa 2.50% in yield), while resistance is 132.99 (Nov 19 high).
- A Reuters source report suggesting President Putin is open to discussing a Ukraine ceasefire deal with Donald Trump weighed slightly on core FI ahead of the cash bond open, which was followed by the firmer-than-expected UK CPI report. However, these moves have mostly faded.
- The German cash curve has bear steepened, with 30-year yields 2.5bps higher ahead of supply at 1030GMT/1130CET.
- There was limited reaction to the ECB Q3 negotiated wage data, which jumped to 5.4% Y/Y (broadly in line with expectations).
- 10-year peripheral spreads to Bunds are a little wider, with the 10-year BTP/Bund spread 1bp wider at 122bps.
- The Bank of Spain said that recent floods are likely to reduce GDP by 20bps in Q4.
- The remainder of today’s regional calendar is light, with de Guindos, Stournaras and Makhlouf scheduled to speak this evening.
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