OIL: Crude Edges Higher Amid Heightened Geopolitical Risks
Mar-20 07:43
Crude markets remain supported by heightened geopolitical tensions in the Middle East as Iran-backed Houthis targeted Ben Gurion airport in Tel Aviv. The US has said that it will continue to attack Yemen’s Houthis.
- US Fed Chair Powell said the outlook is highly uncertain amid a downward revision to growth and upward to inflation. The decision to slow the pace of QT may have supported risk appetite.
- US President Trump is now considering extending Chevron’s licence to export oil from Venezuela, according to the WSJ. Financial penalties placed on countries purchasing oil from Venezuela are being considered.
- Ukrainian President Zelenskiy said a halt to strikes on energy facilities in the war with Russia could come quickly. The market is focused on potential progress toward a ceasefire that could lead to the easing of sanctions and increased Russian oil output.
- EIA yesterday showed US crude inventories rose slightly more than expected by 1.75mbbl despite a rebound in exports back up to 4.6mb/d and higher refinery utilisation.
- US diesel cracks rallied yesterday as distillates inventories fell more than expected amid robust US product demand. Gasoline cracks softened amid signs of stronger production and weaker weekly implied demand.
- Brent MAY 25 up 0.4% at 71.06$/bbl
- WTI MAY 25 up 0.4% at 67.17$/bbl
- Brent MAY 25-JUN 25 unchanged at 0.46$/bbl
- Brent JUN 25-DEC 25 up 0.04$/bbl at 2.23$/bbl
- US gasoline crack down 0.2$/bbl at 23.76$/bbl
- US ULSD crack up 0.1$/bbl at 26.67$/bbl
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USD: In the Green against most G10s
Feb-18 07:42
- The Dollar was in the green overnight against G10s, US Yields edged higher catching with the Europe price action following President's day Yesterday.
- While the RBA cut its rate as expected, the Central Bank signalled that it would be more cautious on further easing, and as such the AUD is actually closer to flat versus the Dollar going into the European session.
- The Kiwi is the worst early performer, but it is worth noting that NZDUSD printed its best level since 18th December Yesterday, so while the cross is below Yesterday's low, it is still within February's wide traded range.
- Market Participants will be eyeing the expected 50bps cut from the RNBZ Tomorrow.
- USDJPY sees another volatile 98 pips range overnight session, albeit within Yesterday's range, and the Yen remains on the backfoot into the European session, as US Yields stay elevated.
UK DATA: AWE and PAYE Wage Data Both Softer - But RTI Data Showing Trend Lower
Feb-18 07:27
- Looking at the change in private regular AWE (which came in at 6.22%Y/Y in the 3-months to December, a little lower than the 6.29% pencilled in by the BOE's MPR), we think that the slight downside surprise was broadly equally attributable to both the fresh December data and a downward revision to November.
- There was no revision to the high 6.68%Y/Y for the single month October print, but the single month November print was revised down to 5.90%Y/Y from 6.12%Y/Y (leaving the 3-month November print at 5.89%Y/Y, down from 5.96%). The single month print for December was 6.09%Y/Y.
- However, looking at the PAYE RTI wage data, there was a more meaningful revision and continued downside momentum. The flash estimate for January 2025 came in at 5.01%Y/Y - that is the lowest since April 2022. December was revised down to 5.20%Y/Y from 5.41%. Like in the AWE data there is a temporary spike higher in the October print.
- As can be seen from the chart below, the HMRC PAYE RTI median pay growth continues to trend downwards.
EGB OPTIONS: Bund put fly
Feb-18 07:22
RXM5 127.50/126.50/125.50p fly, bought for 5.5 in 3k.
