OIL: Crude Rallies As Market Watches Rise In Product Prices
Oil rallied on Tuesday as the impact on global supplies from sanctions on Russia came to the fore again after US President Trump said that a US-India trade deal was close. Also, demand for products remains robust, as seen in US inventory data, and the announcement of restrictions on Russia’s Rosneft and Lukoil drove prices sharply higher. Short-covering also supported oil benchmarks on Tuesday.
- WTI rose 1.5% to $61.04/bbl after reaching $61.28, below initial resistance at $62.59, 24 October high. It fell to $59.66 but has struggled to hold moves below $60, which provided support to the benchmark from a technical perspective. Support lies at $58.83, 6 November low.
- Brent was up 1.7% to $65.13/bbl after a peak of $65.31 to be slightly higher in November. It approached resistance at $65.98, 9 October high. Initial support is a $62.84, 6 November low.
- With product prices surging, attention will be on Wednesday’s US industry inventory data. The official EIA release will be Thursday.
- India is the second largest importer of Russian oil and if it looks to other sources there could be a large quantity of Russian crude unconsumed.
- The excess oil supply driven by increased OPEC and non-OPEC output remains in focus with the spread between the WTI December-January contracts only 6c. The EIA short-term outlook, IEA annual report and OPEC monthly report are published Wednesday.
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AUSSIE 3-YEAR TECHS: (Z5) Southbound
- 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: 96.405 @ 15:40 BST Oct 10
- 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 have traded lower and the contract has cleared the Sep 3 low of 96.435. A break of this level 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.
NZD: NZD/USD - Bounces On Open As Temperature Is Lowered, Poor Weekly Close
The NZD/USD had a range Friday night of 0.5717 - 0.5758, Asia is trading around 0.5740(+0.30%). Some clarification from China over the weekend on their new rare earth export controls has seen the US walk back its aggressive stance and a more conciliatory tone is being set. I suspect a lot of Friday's moves will see some decent pullbacks on this, but how long it lasts is anybody's guess. The NZD had a poor weekly close and technically remains a sell on rallies now for those looking for a currency to be short of in their basket. The sell zone remains back toward the 0.5800 area with the market looking for a potential move back towards the 0.5500/0.5600 area.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5850(NZD300m Oct 14), 0.5950(NZD312m Oct 16) - BBG
- Data/Event: Performance Services Index, Net Migration SA
Fig 1: NZD/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW900bn 91-Day Bonds
- South Korea to Sell KRW3.8tn 3-Year Bonds
- Philippines To Sell PHP 7.0Bln 91D Bills (PH0000059792)
- Philippines To Sell PHP 7.5Bln 182D Bills (PH0000060253)
- Philippines To Sell PHP 7.5Bln 364D Bills (PH0000061152)
