OIL PRODUCTS: Gasoline Extends Decline With Focus on Weak Demand
Apr-20 14:19
Gasoline cracks extend the decline from yesterday with the US crack falling nearly 6$/bbl so far this week.
- Gasoline cracks fell yesterday following the EIA data showing a stock build and drop in US implied demand. Demand concerns are weighing on margins and assisted by the return of US refineries from maintenance and the gradual return of French refineries.
- Asian spreads are also falling driven by slower gasoline demand in major consuming nations such as Indonesia.
- Oil product market oversupply could be eased if China cuts quota for refined oil products exports in a second batch for 2023. Quotas could be reduced as domestic demand improves while there is less need to boost its economy through oil products exports. China's refinery throughput hit a record-high in March.
- RBOB MAY 23 down -2.6% at 2.58$/gal
- US gasoline crack down -1.4$/bbl at 30.46$/bbl
- EU Gasoline-Brent down -1$/bbl at 15.27$/bbl
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STIR FUTURES: Stickier Expectations For Near-Term FOMC Meetings, 2H23 Climbs Further
Mar-21 13:51
- The latest push higher in front end Treasury yields (2Y now +20bps) comes with large increases in rate expectations for 2H23 with a year-end rate now seen at 4.27% for +22bp on the day.
- Stickier expectations for near-term meetings though: 20bp for tomorrow’s FOMC decision and a cumulative 36bps to a peak 4.94% in May (+3.5bps since the start of the US session).
- The combination trims implied 2023 cuts to 64bps from 85bp at yesterday’s close, at what would be the lowest close since Mar 10.
US-CHINA: Sen Hawley To Introduce Hawkish China Bill Today
Mar-21 13:51
Senator Josh Hawley (R-MO) will introduce a bill today to revoke China’s normal trade relations status, apply higher tariffs on Chinese imports, and provide the president increased authority to apply unliteral tariffs.
- Hawley: “As we face a new age of competition with China, we need an agenda in Washington... We can start by revoking the sweetheart deal D.C. elites handed to China 23 years ago - end normal trade relations, put in place strong tariffs, and protect American workers.”
- The mood on Capitol Hill is currently ultra-hawkish on China but it is unclear if Hawley’s bill has enough support to pass.
- A resolution to establish a Select Committee on China passed the House (vote: 365-65) in January and a resolution condemning the Chinese "spy balloon" passed the House unanimously in February but the Senate is seen as more conservative on major foreign policy actions.
- The measures in Hawley's bill would be similar to those applied on Russia following the invasion of Ukraine. Politico notes: “U.S.-Russian trade is relatively small, totalling just about $36 billion in 2021. U.S.-China trade, on the other hand, totalled over $650 billion in the same year.”
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