OIL: Crude Range Trading Ahead Of US Tariff Announcement
Oil prices are little changed during APAC trading today as markets wait for details on US reciprocal tariffs due to be announced at 1600 ET or 0700 AEDT Thursday. Worries regarding the impact of increased trade protectionism on global oil demand have often driven prices lower this year and so the announcement will be important for energy markets. The reaction is likely to depend on markets’ assessment of the severity of the policy. The USD is 0.1% lower.
- WTI is flat today at $71.19/bbl off the intraday high of $71.34. It has remained below initial resistance at $71.83. Brent has also traded in a narrow range and is moderately higher at $74.50 close to today’s peak of $74.62. Initial resistance is at $75.04.
- US President Trump has said that the tariffs will take effect immediately, while Treasury Secretary Bessent stated that there will be a “cap” and that countries can negotiate to reduce the tariff they face below this. There could be a tiered tariff structure along with specific reciprocal taxes depending on what the US faces in other countries, according to Bloomberg.
- Other significant uncertainties include the outlook for Russia-Ukraine. A bipartisan group of 50 US senators tabled a sanctions plan on Russia and those who buys its fossil fuels, if Russia’s President Putin doesn’t honestly negotiate a truce and then stick to it.
- Bloomberg reported that there was a US crude stock build of 6mn barrels last week, according to people familiar with the API data. Product inventories continued to decline though with gasoline down 1.6mn and distillate 11k. Official EIA data is out later today.
- Apart from the US tariff announcement, the Fed’s Kugler speaks on inflation expectations and March US ADP employment and February orders are released. The ECB’s Lagarde, Schnabel and Lane talk.
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STIR: RBA Dated OIS Pricing Mixed Vs. Pre-RBA Decision Levels
RBA-dated OIS pricing is flat to 3bps firmer across meetings today.
- Nevertheless, pricing remains mixed compared to February’s pre-RBA Decision levels—meetings through July are 2-5bps firmer, while those beyond are 2-9bps softer.
- Last week, January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The first month of the quarter has limited updates for services inflation. The seasonally adjusted data is consistent with the RBA remaining cautious with it stating that “upside risks remain”.
- A 25bp rate cut in April is given a 9% probability, with a cumulative 57bps of easing priced by year-end (based on an effective cash rate of 4.09%).
Figure 1: RBA-Dated OIS – Today Vs. Pre-RBA Levels
Source: MNI – Market News / Bloomberg
CHINA PRESS: Two Session To Highlight Consumption, Tech Innovation
Authorities are expected to focus on promoting consumption and developing AI, and other emerging sectors during the upcoming “Two Sessions” this week, China Fund News reported, citing analysts. Except for the trade-in program for consumer goods, more medium- and long-term measures to boost spending are also expected, such as offering maternity allowance and supportive measures for pension and social security, said Zhu Guoqing, deputy general manager at Pengyang Fund.
CHINA PRESS: PBOC To Boost Financing Support For SMEs
The People’s Bank of China will guide banks to support private and small business through increased lending using structural monetary policy tools, and further facilitate diversified financing channels via stocks, bonds and loans, according to a meeting held by the PBOC and four other departments. Officials needed to improve the credit enhancement system for private and small firms, accelerate the issuance of regulations on supply chain finance, and strengthen bond market product innovation, the meeting said. (Source: PBOC website)
