OIL: Crude Extends Decline After US Oil Inventory Data
Crude front month futures are still strongly down on the day and slightly softer following the latest EIA weekly petroleum inventory data. Diesel cracks have edged higher following an unexpected stock draw, but gasoline cracks continue to drift lower.
- US crude inventories rose slightly more than expected by 2.55mbbl driven by a drop in exports and despite lower production and imports. Exports extended the decline seen the previous week down to the lowest since early January at 3.2mb/d. Crude production also fell to the lowest since January after a re-benchmarking of weekly numbers against monthly data. Cushing stocks increased again but remain below the previous seasonal five-year range low. Refineries cut utilisation to partially recover from the decline last week - up to 86.7% but still below year ago levels.
- Gasoline stocks fell as expected by 1.60mbbl to the lowest since December but still just above seasonal normal levels. The drop was driven by lower production on the week and despite a dip in implied demand. Four-week average implied gasoline demand drifted lower in line with the previous five-year seasonal average.
- Distillates stocks showed an unexpected drop of 3.54mbbl to the lowest since Nov. 2023 with an increased in weekly implied demand and slightly higher implied demand. The four-week average implied demand edged back up and now in line with the five-year average for the time of year.
- Brent JUN 25 down 5.4% at 59.43$/bbl
- WTI MAY 25 down 5.7% at 56.18$/bbl
- WTI MAY 25-JUN 25 down 0.04$/bbl at 0.44$/bbl
- WTI JUN 25-DEC 25 down 0.47$/bbl at 0.91$/bbl
- US gasoline crack down 1.3$/bbl at 23.18$/bbl
- US ULSD crack down 1.1$/bbl at 25.77$/bbl
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EQUITIES: S&P 500 E-Minis Through Friday's Low
Fresh pressure for equities here as S&P 500 e-mini futures break below Friday’s base. Nothing new in terms of headline flow, with single-stock news out of Europe and continued U.S. growth worry cited as the most meaningful drivers on the day.
- The focus is now on the Sep 12 ‘24 low (5,658.00) in the S&P 500 e-mini.
USDJPY TECHS: Fresh Cycle Low
- RES 4: 154.80 High Dec 12 ‘24 and a key resistance
- RES 3: 152.21 50-day EMA
- RES 2: 151.30 High Mar 3 and a key near-term resistance
- RES 1: 149.33/150.40 High Mar 6 / 20-day EMA
- PRICE: 146.76 @ 14:48 GMT Mar 10
- SUP 1: 146.64 Intraday low
- SUP 2: 146.26 2.0% 10-dma envelope
- SUP 3: 145.92 Low Oct 4 ‘24
- SUP 4: 144.13 76.4% retracement of the 16 ‘24 - Jan 10 bull leg
The trend needle in USDJPY points south and today’s bearish start to the week reinforces current conditions. The move down has resulted in a breach of 146.95, 61.8% of the Sep 16 ‘24 - Jan 10 bull leg. Sights are on 145.92, the Oct 4 2024 low. Moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend. Key short-term resistance is 151.30, the Mar 3 high. Clearance of this level is required to signal a base.
EGBS: Several Factors Limiting Spread Widening Episodes
Spreads to Bunds remain fairly resilient, with BTPs (~1bp wider) and PGBs (~2bp wider, aided by local political developments) the only real movers of note despite the risk-off flow flagged earlier.
- It seems like the burden of debt-driven fiscal loosening in Germany, expectations for further ECB easing and potential for a greater share of EU funding for fiscal loosening outside of Germany is limiting any widening episodes at this stage.
