OIL: Crude Falls as Middle East Risk Premium Reduces
Oil prices have fallen towards the lows of $86/09/bbl seen last week as some of the geopolitical risk premium linked to Middle East supply fears has unwound after an Israeli retaliatory strike on Iran last week was downplayed.
- Brent JUN 24 down 1.3% at 86.19$/bbl
- WTI JUN 24 down 1.4% at 81.11$/bbl
- Gasoil MAY 24 down 1.3% at 770.5$/mt
- WTI-Brent up 0.05$/bbl at -5.04$/bbl
- Conflict in the Middle East has so far had no impact on physical oil supplies from the region to the global market. Upside price pressure is also limited by global demand growth uncertainty and a possible delay to Fed cuts this year.
- New sanctions against Iran were included in the foreign aid bill passed by the US House on the weekend. It will extend measures to include ships and refineries that process and transport Iranian crude. It will also cover all financial transactions for the purchase of oil products between China’s financial institutions and Iranian banks facing sanctions.
- EU foreign ministers will discuss additional sanctions on Iran at their meeting today.
- Brent JUN 24-JUL 24 down 0.02$/bbl at 0.76$/bbl
- Brent JUN 24-DEC 24 down 0.2$/bbl at 4.16$/bbl
- Crude time spreads are softer today but still holding onto strong backwardation while money managers are the most bullish on Brent since March 2021. Near term crude options are maintaining a small call skew although much reduced from the bullish skew seen last week.
- Diesel crack spreads and time spreads continue to decline with soft near term US demand weighing on prices. The prompt Gasoil spread last week fell into contango for the first time since May 2023.
- US gasoline crack up 0.1$/bbl at 30.65$/bbl
- US ULSD crack down 0.3$/bbl at 23.4$/bbl
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USDCAD TECHS: Resistance Remains Exposed
- RES 4: 1.3729 76.4% retracement of the Nov 1 - Dec 27 bear leg
- RES 3: 1.3661 High Nov 27
- RES 2: 1.3623 61.8% retracement of the Nov 1 - Dec 27 bear leg
- RES 1: 1.3614 High Mar 19 and bull trigger
- PRICE: 1.3600 @ 15:41 GMT Mar 22
- SUP 1: 1.1.3420 Low Mar 8 and the bear trigger
- SUP 2: 1.3359 Low Jan 31 and key S/T support
- SUP 3: 1.3343 Low Jan 12
- SUP 4: 1.3288 Low Jan 5
USDCAD is trading higher but for now, remains below its recent highs. Key short-term resistance has been defined at 1.3614, the Mar 19 high. A break of this level would confirm a resumption of the uptrend that began on Dec 27. This would expose 1.3623, a Fibonacci retracement, and 1.3661, the Nov 27 high. Key support has been defined at 1.3420, the Mar 8 low. A break would be bearish.
AUDUSD TECHS: Bearish Price Action
- RES 4: 0.6729 High Jan 12
- RES 3: 0.6708 61.8% retracement of the Dec 28 - Feb 13 bear cycle
- RES 2: 0.6668 High Mar 8 and the bull trigger
- RES 1: 0.6570/6635 50-day EMA / High Mar 21
- PRICE: 0.6522 @ 15:40 GMT Mar 22
- SUP 1: 0.6504 Low Mar 19
- SUP 2: 0.6478 Low Mar 5
- SUP 3: 0.6443 Low Feb 13 and the bear trigger
- SUP 4: 0.6412 76.4% Fibonacci retracement for Oct - Dec upleg
AUDUSD has reversed lower in line with a recovery in the USD. The move lower reinstates a bearish threat and attention is on support at 0.6478, the Mar 5 low. A break of this level would expose the key support and bear trigger at 0.6443, the Feb 13 low. Moving average studies continue to highlight a short-term downtrend. Initial resistance is at Thursday’s 0.6635 high.
EURJPY TECHS: Trend Outlook Remains Bullish
- RES 4: 167.45 1.382 proj of the Jan 2 - 19 - Feb 1 price swing
- RES 3: 166.46 1.236 proj of the Jan 2 - 19 - Feb 1 price swing
- RES 2: 166.00 Round number resistance
- RES 1: 165.35/67 High Mar 20 / 2.0% 10-dma envelope
- PRICE: 163.66 @ 15:38 GMT Mar 22
- SUP 1: 162.60 20-day EMA
- SUP 2: 161.39 Trendline drawn from Dec 7 low
- SUP 3: 160.22 Low Mar 11
- SUP 4: 159.47 Low Feb 8
The EURJPY uptrend remains intact following this week’s move higher and the latest pullback is considered corrective. The cross has traded through 164.30, the Nov 16 ‘23 high and the medium-term bull trigger. This confirms a resumption of the long-term uptrend. The break higher opens 165.67, the top of a MA envelope, and the 166.00 handle further out. Initial firm support lies at 162.60, the 20-day EMA.
