OIL: Crude Weighs Geopolitical Risks Ahead of US Stocks and Fed Decision
Crude prices are trading just below previous close levels after a net decline yesterday amid rising US crude stocks and hopes of a Ukraine peace deal.
- Russia’s president Putin only agreed to a partial ceasefire, and an end to the war and sanctions is likely some way off.
- Markets wait for the Fed decision with no change in rates widely expected. The impact of increased protectionism on global growth has been worrying crude and a hawkish or very concerned Fed would add to that.
- Tensions in the Middle East add to the geopolitical risks with the end of the Gaza ceasefire and the US targeting rebel Houthis in Yemen and saying it will blame Iran if any Red Sea shipping is attacked.
- EIA US crude inventories are today expected to show a build of 0.54mbbl and with draws for gasoline and distillates, a Bloomberg survey shows. API data yesterday showed a crude stock build of 4.59mbbl, according to Bloomberg sources. Gasoline stocks fell 1.71mbbl and distillates fell 2.15mbbl.
- Gasoline cracks steady after gaining towards start of the month levels to extend a recovery from lows on March 7.
- Brent MAY 25 down 0.3% at 70.33$/bbl
- WTI APR 25 down 0.4% at 66.65$/bbl
- Brent MAY 25-JUN 25 down 0.01$/bbl at 0.43$/bbl
- Brent JUN 25-DEC 25 down 0.02$/bbl at 2.1$/bbl
- US gasoline crack down 0.2$/bbl at 24.09$/bbl
- US ULSD crack up 0$/bbl at 25.48$/bbl
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SWEDEN: Statistics Sweden Recommend Caution With Jan LFS Data
Taken at face value, the January LFS report was weak. One month of data isn't enough to meaningfully price back in a 25bp March cut yet, but the Riksbank are certainly sensitive to weak activity/labour market data. The increase in the January unemployment rate to 9.7% (vs 8.5% prior) was the largest one month change since April 2020 (i.e the start of the pandemic).
- However, Statistics Sweden suggest the data “may be overestimated” because “unemployment was at a relatively low level in the LFS January 2024”. They note that “further measurements are required” and thus the data should be interpreted with “some caution”.
- Swedbank also wrote last week that Swedish LFS response rates have fallen significantly over the last decade, averaging 43% in 2024.
- Employment growth was -0.5% M/M (vs a strong 0.8% prior), bringing the employment rate down to 68.6% (vs 69.0 prior).
- On a 3m/3m basis, employment growth was flat, but negative when reported to 2dps. As such, this was the fifth consecutive negative month of job growth.
- The Riksbank will continue to assess the labour market using a variety of indicators, including the Public Employment Service data (where the unemployment claims rate has flatlined at 7.0% in recent months) and the Economic Tendency Indicator's expected employment metrics (which have slightly increased over the last three months).
EQUITY TECHS: E-MINI S&P: (H5) Sights Are On Key Resistance
- RES 4: 6205.38 0.764 proj of the Jan 13 - 24 - Feb 3 price swing
- RES 3: 6200.00 Round number resistance
- RES 2: 6178.75 High Dec 6 and key resistance
- RES 1: 6162.25 High Jan 24
- PRICE: 6143.00 @ 07:16 GMT Feb 17
- SUP 1: 6075.54 20-day EMA
- SUP 2: 6014.00/5935.50 Low Feb 10 / 3
- SUP 3: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
- SUP 4: 5842.50 Low Jan 14
S&P E-Minis traded higher this week and the contract maintains a firmer tone. The latest recovery undermines a recent bearish threat and attention turns to resistance at 6162.25, the Jan 24 high. Clearance of this level would expose key resistance at 6178.75, the Dec 6 ‘24 high. A move above this hurdle would resume the primary uptrend. Initial key support has been defined at 6014.00, the Feb 10 low. A break would be a bearish development.
US TSY OPTIONS: Outright put buyer
TYH5 108p, bought for '01 in 5k.
