OIL PRODUCTS: Eni Expects Distillate Tightness to Sustain
Jul-25 16:30
Eni said on its Q2 call that its refineries benefitted from stronger margins at the end of June into July due to distillate tightness. It expects that trend to sustain into Q3 due to sustained tightness.
- “What we expect is that for some months this situation could remain because the storage of products is very low. The crack spread of gas oil is very very high because of the stress in the ban of Russian crude, Russian gas oil. This is very positive for the at least for all the driving season," Claudio Descalzi, Eni CEO said.
- Eni is working on the conversion of its Sannazzaro refinery into a bio-refinery, aligning with its decarbonization strategy.
- Based on prior reporting, completion is expected by 2027. This transformation will see the refinery producing 550,000 tons per year of renewable fuels, primarily HVO diesel, HVO naphtha, and bio-LPG, from biogenic feedstocks.
- Four additional bio-refinery projects are in the pipeline, with two located in Asian markets, indicating a strategic shift from traditional refining to sustainable fuel production.
- The transformation of refining assets into bio-refineries is contributing to lower tax rates by turning previously loss-making Italian assets into profitable operations, allowing Eni to restate certain tax credits.
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US TSYS/SUPPLY: Preview 5Y Auction: Current WI 19.4Bp Rich to Last Month's Stop
Jun-25 16:05
- Tsy futures are trading off mid-morning lows (TYU5 currently -4 at 111-17 vs. 111-11.5 low) ahead of the $70B 5Y note auction (91282CNK3) at 1300ET, WI is currently running at 3.877%, 19.4bp rich to last month's stop.
- May auction recap: reaction was positive: 5s richened about 0.5bp on the 2s5s7s butterfly, with 10Y yields down 1.4bp to 4.477%. Typically solid with the 4.071% high yield representing a 0.4bp trade-through versus the 4.075% when-issued yield at auction cutoff. Bid-cover of 2.39x - in line with the 5-auction average.
- This was the 6th 5Y auction in the last 7 to trade through with more solid peripheral statistics than usual: A record (going back to data from the early 2000s) high 78.4% takedown by indirects (seen by some as a proxy for foreign investors) was a highlight, and well up from the 69.0% prior 5-auction average.
- Primary dealers took down just 9.2% of competitives, below the 11.7% average of the prior 5 auctions, and the lowest since January 2023 - which was in turn the lowest on record (going back to the early 2000s).
US 10YR FUTURE TECHS: (U5) Bull Cycle Remains Intact
Jun-25 15:57
- RES 4: 112-23 High May 1 and key resistance
- RES 3: 112-04+ High May 2
- RES 2: 111-30/31+ 76.4% of May 1-22 downleg / 1.0% 10-dma env
- RES 1: 111-24 Intraday high
- PRICE: 111-17 @ 16:53 BST Jun 25
- SUP 1: 110-23 50-day EMA
- SUP 2: 110-10+/109-28 Low Jun 16 / Low Jun 6 / 11
- SUP 3: 109-12+ Low May 22 and the bear trigger
- SUP 4: 109-09+ Low Apr 11 and key support
Treasury futures are holding on to this week’s gains. Price has traded above resistance at 111-14+, the Jun 5 high and 61.8% of the May 1 - 22 downleg. The clear break of this hurdle strengthens a bullish cycle and has opened 111-30, a Fibonacci retracement. Clearance of 111-30 would strengthen current conditions. Initial pivot support to watch lies at 110-23, the 50-day EMA. A clear breach of this EMA would signal a potential reversal.
US TSY OPTIONS: Aug'25 10Y Vol for Sale
Jun-25 15:46
- -5,000 TYQ5 111.5 straddles 131-130 ref 111-16
- -8,000 TYQ5 110.25/112.75 strangles, 36 ref 111-16
