OIL: Crude Higher On Geopolitical Tensions & OPEC Pause
Oil prices range traded on Monday but finished higher after OPEC confirmed that it would pause its production increases (reversing its previous cuts) in Q1, a time of seasonally low demand but also reflecting concern over the projected record surplus for 2026. It had announced this at the start of December. Markets are also watching geopolitics with Ukraine continuing to strike Russian energy infrastructure and peace talks continuing. There are also tensions between the US and Venezuela.
- WTI rose 1.6% to $59.48/bbl. It reached $59.97 during the APAC session before falling to $58.83 during European/US trading and then oscillated around $59.40 thereafter. The bear trigger is at $55.99 while resistance is $61.84.
- Brent is up 1.4% to $63.26/bbl after a high of $63.82 but then fell to $62.69 before settling around $63.20. The benchmark continues to hold above the bear trigger at $59.93 but hasn’t been able to break above initial resistance at $65.25.
- US President Trump has offered Venezuelan President Maduro safe passage if he and his family leave immediately. The US has been striking boats it sees as carrying drugs. The White House is to hold a meeting Monday according to CNN. Venezuela was the 17th largest exporter of oil in 2023 (IEA).
- Kazakhstan requested that Ukraine stop its strikes as it had to halt flows to a damaged wharf on the Black Sea. Ukraine attacked two Russian Black Sea shadow fleet vessels on the weekend. Kazakhstan shipped an average 1.6mbd in 2025 through the Caspian Pipeline Consortium, according to Bloomberg.
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
