OIL: Crude Facing Bear Triggers After Reports Show Market Surplus
Oil prices fell sharply after OPEC published estimates showing a Q3 market surplus of 500kbd when it had previously calculated a 400kbd deficit due to higher OPEC and US supplies. It continues to expect a 2026 surplus but lower than the IEA’s estimates, who publishes its report on Thursday. The EIA also shifted its 2026 US output forecast higher.
- WTI sank 4.3% to $58.40/bbl, close to the intraday low of $58.30, below initial support at $58.83 opening the bear trigger at $55.96. The spread between the December and January contracts is now zero signalling expected easier market conditions, in line with industry forecasts.
- Brent is down 3.9% to $62.63/bbl to be -3.3% in November. It reached a low of $62.56, below initial support at $62.84 opening the bear trigger at $59.97. The widely forecast 2026 excess supply is likely to continue putting downward pressure on prices.
- Bloomberg reported that there was a US oil inventory build of 1.3mn barrels last week, according to people familiar with the API data. Gasoline stocks continued to decline though (-1.4mn) but distillate rose 944k. The official EIA data is out Thursday.
- The EIA revised US 2026 production up 0.5% to 13.58mn barrels.
- OPEC estimated that non-OPEC countries increased Q3 production by 890kbd with around half from the US.
- Developments related to Russia are one of the few areas that could provide upside to crude. Reuters reporters that Lukoil and Rosneft have requested more time to adjust to new restrictions. Diesel prices have jumped due to the sanctions and Ukrainian attacks on Russian refineries.
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JPY: USD/JPY Uptrend Intact, Domestic Politics In Focus As Onshore Mkts Return
Yen underperformed through Monday trade, as risk sentiment stabilized from Friday's sharp sell-off. Global equities were higher led by US markets, while USD/JPY highs were at 152.45. We currently track near 152.20/25 (yen lost 0.72% Monday, the worst performed in the G10 space). Focus for USD/JPY will be a move above 152.64, which is needed to erase the sell-off triggered by Trump's threats to raise tariffs on China on Friday.
- From a technical standpoint, the underlying bullish trend condition in the pair remains intact and Friday’s pullback is for now, considered corrective. Further north, a break of Friday’s 153.27 high, would resume the uptrend and open 154.39, a Fibonacci retracement point. Important support on the downside lies at 149.45, the 20-day EMA.
- Japan markets return today. Politics remains a focus point, with opposition parties set to meet today to discuss the collapse of the governing coalition last week. These meetings could help determine whether Takaichi goes ahead with a minority government, or looks to bring forward elections. Her odds of becoming the next PM have slid to 77, per Polymarket (down from post LDP leadership election highs near 100).
- Locally on the data front Sep money stock figures, not typically a market mover.
- In the option expiry space, note the following for NY cut later today: Y151.50($691mln), Y152.00($751mln).
AUSSIE 3-YEAR TECHS: (Z5) More Stable After Break Lower
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.685 - 1.000 proj of the Sep 3 - 12 - 15 price swing
- RES 1: 96.615 - High Sep 12
- PRICE: 96.480 @ 15:26 BST Oct 13
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Aussie 3-yr futures surged on the resumption of trade, returning focus higher after the break of support last week. While prices appear more stable, the recent break of Sep 3 low of 96.435 negates the recent short-term bullish theme. This breach signals scope for an extension towards 96.280, the May 15 low on the continuation chart. The short-term resistance to watch is 96.615, the Sep 12 high. Clearance of this level is required to reinstate a bullish theme.
ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW2.6tn 2-Year Bonds
- Hong Kong to Sell HK$19 Bn 182-Day Bills
- Hong Kong to Sell HK$68.346 Bn 91-Day Bills
- Bank of Thailand to Sell THB65 Bn of 91-Days Bills
- Bank Indonesia to Sell 96D SVBI Bills
- Bank Indonesia to Sell 365D SVBI Bills
- Bank Indonesia to Sell 32D SVBI Bills
- Bank Indonesia to Sell 273D SVBI Bills
- Bank Indonesia to Sell 182D SVBI Bills
- Malaysia to Sell MYR5 Bn 2030 Bonds
- China to Sell CNY40bn 2045 Bonds
- MAS to Sell S$14.6 Bn 28-Day Bills
- MAS to Sell S$1.8 Bn 252-Day Bills
- MAS to Sell S$22.1 Bn 84-Day Bills
- Taiwan to Sell NT$30 Bn 10-Year Bonds
- Indonesia To Sell 2039 Sukuk Bonds (PBS034)
- Indonesia To Sell 2028 Sukuk Bonds (PBS030)
- Indonesia To Sell 2027 Sukuk Bonds (PBS003)
- Indonesia To Sell 2049 Sukuk Bonds (PBS038)
- Indonesia To Sell 2041 Sukuk Bonds (PBS039)
- Indonesia To Sell 25D Sukuk Bills (SPNS10112025)
- Indonesia To Sell 172D Sukuk Bills (SPNS06042026)
- Indonesia To Sell 270D Sukuk Bills (SPNS13072026)
