OIL: Crude Rises Further As US-China Talks Follow Less Expected US Output
Oil prices continued rallying today after rising sharply on Tuesday following the EIA’s downward revision to its expectations for US shale production this year because of lower prices. Today’s increase in crude has been driven by news that US-China trade talks will occur this week with US Treasury Secretary Bessent and Trade Representative Greer meeting China’s Vice Premier Lifeng in Switzerland on the weekend. This has helped boost the US dollar (USD BBDXY index +0.3%).
- WTI is up 1.1% to $59.73, close to the intraday high, while Brent is 0.9% higher at $62.72. Both are currently around 2.4% higher this week. Benchmarks declined sharply over recent weeks on concerns that increased protectionism and current uncertainty would weigh on global energy demand.
- Bessent noted that current tariff levels are “unsustainable” and that de-escalation with China needs to occur before they “can move forward”.
- Meanwhile, China announced further stimulus and measures to support property & equities today. The PBoC cut the SLF rates used for financial institutions’ short-term funding, the 7-day reverse repo and reserve requirements. China is the world’s largest oil importer.
- Official EIA data are published later and with the EIA downward revision to US production and the industry-reported 4.49mn barrels stock drawdown last week, it is likely to continue to be monitored closely. Signs of a reduction in demand due to current uncertainty will also be considered.
- Later the focus will be on the Fed decision, which is widely expected to leave policy unchanged. March German factory orders and euro area retail sales print.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
CHINA: FX Reserves for March $3.24tn
- China’s end of March FX reserves were $3.240 trillion, versus $3.227tn as for February according to the PBOC release today.
- Forex reserves rose to $13.4bn
- Gold reserves jumped to $229.5bn as the PBOC’s buying program resumes and is the fifth successive month that they have risen.
- This marks the 16th month consecutively that China's foreign exchange reserves have been above $3.2 trillion.
US TSYS: Cash Bonds Bull-Steepen, Risk-Off Pared
TYM5 is stronger at 113-21, +19+ from closing levels in today's Asia-Pac session, but well off today's high of 114-10.
- According to MNI's technicals team, focus for TYM5 is on technical resistance at 114-16 (2.000 proj of the Jan 13 - Feb 7 - Feb 12 price swing) after having breached round number resistance (114-03.5 high) on Friday.
- Markets continue to be hit by the ongoing trade-related pullback in risk appetite, although some have begun to stabilise at lower levels due to selling fatigue and profit-taking, including risk-sensitive AUD and oil prices. US equity futures are down sharply but also off their intraday lows.
- Some Asian countries have said today that they will take steps to stabilise markets if needed and Japan has said it will speak with the US.
- Nevertheless, the market is continuing to digest the implications of Friday's unveiling of a 34% duty on all US imports by China.
- Cash US tsys are 3-15bps richer, led by the short-end, in Asia-Pac session.
EUROSTOXX50 TECHS: (M5) Impulsive Sell-Off Extends
RES 4: 5254.79 20-day EMA
- RES 3: 5047.00 High Apr 4
- RES 2: 4931.00 Low Jan 13 (cont)
- RES 1: 4809.00 Low Dec 20 ‘24 (cont)
- PRICE: 4625.00 @ 05:45 BST Apr 7
- SUP 1: 4600.00 Round number support
- SUP 2: 4542.27 3.000 proj of the Mar 3 - 11 - 19 price swing
- SUP 3: 4494.00 Low Aug 5 ‘24 (cont)
- SUP 4: 4372.46 46.4% retracement of the Oct ‘23 - Mar ‘25 bull cycle
Eurostoxx 50 futures remain in a bear cycle following the latest impulsive sell-off. Last week’s move down resulted in a break of 5229.00, the Mar 11 low. Today’s sell-off has resulted in a breach of a key support at 4699.00, the Nov 19 ‘24 low (cont). This exposes the 4600.00 handle ahead of 4494.00, the Aug 5 ‘24 low (cont). The contract is oversold, a recovery would allow this condition to unwind. Initial resistance is 4809.00, the Dec 20 ‘24 low (cont).
