OIL: Crude Unwinds Week’s Gains As Excess Supply Worries Outweigh Geopolitics
Nov-18 04:31
Oil has unwound Monday’s gains during today’s APAC session on weaker risk appetite. WTI is down 0.8% to $59.50/bbl, close to the intraday low, and has traded below $60 over the day. Brent is 0.7% lower at $63.74, the day’s trough. While crude has trended lower over November, geopolitical risks have pushed back against market surplus concerns keeping it in a narrow range.
- Conflict is impacting fuel output in Russia and Sudan, while Iran’s redirection of a tanker in the Gulf of Oman into its own waters increases the risk to the significant shipments travelling through the area.
- The grace period before the introduction of sanctions on Russia’s Rosneft and Lukoil ends in a few days and it remains unclear how they will impact the oil majors’ exports and overseas assets driving the discount on Russia’s Urals benchmark to its highest since June 2023, according to Bloomberg. Meanwhile, Ukraine continues to strike ports and refineries.
- With the oversupply situation firmly in focus, inventory data will continue to be important. US industry-based stocks are released later on Tuesday with the official EIA data on Wednesday.
- Both OPEC and non-OPEC have increased output this year and Bank of Montreal is reporting that Canadian oil sands production reached a record in June which is set to rise to 6mbd by 2030.
- China’s product exports were strong in October with gasoline up 11.8% y/y and diesel +55.7% y/y. However YTD they were down 10.3% y/y and 22.7% y/y.
- Later the Fed’s Barr & Barkin, BoE’s Pill & Dhingra, and ECB’s Buch, Elderson, Machado & Tuominen speak. Delayed US IP and final August orders are released as well as ADP weekly employment estimates, November NY Fed services and NAHB housing.
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
