OIL: Crude Edges Higher Assessing Middle East Risk
Oil prices are moderately higher today after falling on Friday to the lowest since Nov. 18 with further Middle East risk weighed with possible market oversupply.
- A potential excess supply in 2025 continues to weigh on prices despite the most recent delay to the return of OPEC+ supply to the market until April. Some analysts suggest growing non-OPEC+ supply in 2025 will meet demand growth limited by soft growth in China.
- Saudi Arabia has cut prices for shipments to Asia more than expected with the Arab Light premium falling to its lowest in four years to +$0.9/bbl. It also reduced prices for Europe but not to North America.
- Geopolitics in the Middle East remain in focus with the Iranian- and Russian-backed Assad regime in Syria being toppled by Turkish-supported rebel groups on the weekend.
- Money managers increased net long crude positions last week, prior to the OPEC+ meeting, with short only Brent positions falling to the lowest since May.
- Diesel and gasoline cracks have steadied in recent days after a pullback in diesel spreads during late November and early December to the lowest since late October.
- Brent FEB 25 up 0.6% at 71.55$/bbl
- WTI JAN 25 up 0.7% at 67.67$/bbl
- Brent FEB 25-MAR 25 up 0.02$/bbl at 0.34$/bbl
- Brent JUN 25-DEC 25 up 0.02$/bbl at 0.83$/bbl
- US gasoline crack up 0.1$/bbl at 12.92$/bbl
- US ULSD crack up 0.4$/bbl at 22.7$/bbl
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Historical bullets
JGB TECHS: (Z4) Bounce Reverses
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 146.53 - High Aug 6
- PRICE: 143.70 @ 16:14 GMT Nov 08
- SUP 1: 143.39 - Low Nov 07
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
Prices fell further Thursday, extending the recent pullback. The return lower at the start of this week has culminated in a break of 143.57, marking both the Jul 17 high on the continuation contract as well as the Oct 22 low. For now, the 50-dma tops out at 144.32, and marks first resistance. A continuation higher would open 146.53, the Aug 6 high (cont) and a bull trigger.
US TSY FUTURES: BLOCK: Late 2Y/10Y Ultra-Bond Flattener
- Flattener crossed late Friday at 1645:30ET, DV01 $322,000
- -8,900 TUZ4 102-23.88, sell through 102-24.38 post time bid vs.
- +3,700 UXYZ4 113-16, post time offer
USDCAD TECHS: Trend Needle Points North
- RES 4: 1.4179 2.0% 10-dma envelope
- RES 3: 1.4000 Round number resistance
- RES 2: 1.3977 High Oct 13 and a key M/T resistance
- RES 1: 1.3959 High Nov 1 / 6
- PRICE: 1.3910 @ 16:29 GMT Nov 8
- SUP 1: 1.3836/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 2: 1.3744 50-day EMA
- SUP 3: 1.3611 Low Oct 8
- SUP 4: 1.3567 Low Oct 7
USDCAD reversed course Wednesday and recovered from Tuesday's low. The trend outlook is unchanged, it remains bullish. Attention is the key resistance at 1.3946, the Aug 5 high. This hurdle has been pierced, a clear break would strengthen the uptrend and open 1.3977, the Oct 13 high and a key medium-term resistance point. Initial firm support to watch lies at 1.3836, the 20-day EMA.
