OIL: Geopolitics Drove Oil Higher Tuesday
Oil prices continued trending higher on Tuesday driven by better risk appetite and rising geopolitical risks. Israel struck Hamas leaders in Qatar which the US unusually reproached it for. Talks had been ongoing for a Gaza peace deal. Also in terms of geopolitics, Ukraine struck Russia’s Kuibyshev-Lysychansk oil pipeline.
- WTI rose 0.8% to $62.77/bbl to be down almost 2% this month. It reached a high of $63.67 before moderating. It has started today around $62.78. Initial resistance is at $66.03 with the bear trigger at $61.29.
- Brent was up 0.7% to $66.48/bbl and is 1.5% lower in September. It peaked on Tuesday at $67.38. Gains continue to be considered as corrective with the bear cycle intact. Initial resistance is at $69.53, while key support is at $64.50.
- Russia reported that refinery utilisation has been low this month due to Ukraine’s attacks on energy infrastructure, according to Bloomberg.
- The EIA short-term energy outlook forecast Brent to fall to an average of $59/bbl in Q4 2025 and then to $50/bbl in early 2026 as inventories build following the increase in OPEC+ output. Low prices should drive lower production and thus destocking through 2026. It revised up its US GDP growth forecast by 0.3pp to 1.7% in 2025 and 0.4pp to 2.4% in 2026.
- Bloomberg reported that there was a US crude inventory build of 1.3mn barrels last week, according to those familiar with the API data. Gasoline rose 300k barrels and distillate 1.5mn. The official EIA data is out later Wednesday.
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ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW700bn 91-Day Bonds
- South Korea to Sell KRW4.4 tn 3-Year Bonds
- China to Sell CNY20bn 28-Day Bills
- Philippines To Sell PHP 8.0Bln 91D Bills (PH0000059537)
- Philippines To Sell PHP 8.0Bln 182D Bills (PH0000059917)
- Philippines To Sell PHP 9.0Bln 364D Bills (PH0000060923)
ASIA: Coming Up in Asia Today
| 0100GMT | 0800HKT | 1000AEDT | South Korea Exports 10 Days YOY AUG |
| 0100GMT | 0800HKT | 1000AEDT | South Korea Imports 10 Days YOY AUG |
| 0530GMT | 0900HKT | 1430AEDT | Malaysia Palm Oil Stockpiles Tons JULY |
| 0530GMT | 1230HKT | 1430AEDT | Malaysia Palm Oil Production Tons JULY |
| 0530GMT | 1230HKT | 1430AEDT | Malaysia Palm Oil Exports Tons JULY |
source: Bloomberg Finance LP / MNI
NZD: NZD/USD - Firmly Back In Recent Ranges, Asset Managers Rebuilding Shorts
The NZD/USD had a range Friday night of 0.5947 - 0.5968, Asia is trading around 0.5950. US equities extended back to their highs on Friday. Risk has opened a little higher this morning, E-minis +0.18%, NQU5 +0.13%. NZD/USD bounced nicely off its 0.5850 support last week but depending on your view I would suspect sellers could return on any bounce back toward 0.6000/0.6050. For the moment firmly back in the 0.5850-0.6100 range looking for a catalyst to break and give clearer direction.
- Bloomberg - “ NZ Prime Minister Christopher Luxon has conceded the government is unlikely to win a reduction in the tariff rate the US has applied to NZ goods. Finance Minister Nicola Willis said the increased US tariff rate is “not a big shock, it's a small one” in terms of the overall economy according to her.”
- “Carry traders are piling into high-yielding EM currencies as wagers on Fed rate cuts weaken the dollar.” - BBG
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5920(NZD583m), 0.5930(NZD646m), 0.5960(NZD301m). Upcoming Close Strikes : 0.5825(NZD300m Aug 14). - BBG
- CFTC Data shows Asset Managers have cut their longs completely and started to rebuild a short in the NZD -1811(Last +3903), the Leveraged community added to their shorts slightly -6778(Last -6250).
Fig 1: NZD CFTC Data
Source: MNI - Market News/Bloomberg Finance L.P
