OIL: Higher, But Still Lower For The Week, Bearish Technicals Intact
Brent crude last tracked near $67/bbl, up a modest 0.60% in Friday trade so far. WTI was close to $63.15/bbl, with both benchmarks supported by the better risk tone seen so far today. The positive spill over from better equity sentiment in the region is a positive, with markets hopeful of tariff de-escalation over the coming weeks as trade negotiations continue
- Still, compared to levels at the end of last week, oil is still of around 1.5% for Brent, while WTI is still down nearly 2.4%.
- Crude was up on Thursday, after declines on Wednesday following uncertainty around Kazakhstan’s commitment to OPEC+ targets, potential June OPEC+ output increases, and ongoing US-Iran nuclear talks.
- Also note, oil prices may see further downside this year on rising production and with demand limited by China’s faltering growth, according to the IEA Executive Director Fatih Birol, cited by Bloomberg.
- A bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective.
- A resumption of the bear cycle would open $53.72, a Fibonacci projection. Resistance to watch is $65.84, the 50-day EMA.
- Oil prices may see further downside this year on rising production and with demand limited by China’s faltering growth, according to the IEA Executive Director Fatih Birol, cited by Bloomberg.
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OIL: US Stock Drawdown Supports Crude In Uncertain World, EIA Data Out Later
Oil prices are moderately higher following data showing a large crude stock drawdown in the US last week. Markets tentatively sold off on news of a partial Ukraine-Russia ceasefire deal but the trend hasn’t continued today as Russia has conditions and US President Trump said that the Russians may be “dragging their feet” on settling an agreement. Positive risk sentiment has also supported crude today.
- WTI is up 0.3% to $69.18 after a high of $69.45 earlier. The benchmark is struggling to hold breaks above the 50-day EMA at $69.33. Brent is off its intraday peak of $73.37, but is hovering around initial resistance at $73.17 to be 0.2% higher at $73.18. The USD index is 0.1% higher.
- Oil price moves have been muted and the market is likely waiting for what US tariffs are actually imposed on April 2. It has been concerned that increased trade protectionism will reduce global demand. Trump has said that he’s likely to be more lenient than reciprocal but doesn‘t want too many exceptions. Thus uncertainty remains heightened.
- Bloomberg reported that there was a US crude inventory drawdown of 4.6mn barrels last week, according to people familiar with the API data. Products continued to decline with gasoline down 3.3mn and distillate 1.3mn. The official EIA data is out today.
- Later the Fed’s Kashkari and Musalem appear and preliminary US February durable goods data print. The ECB’s Cipollone participates in a panel and UK February CPI and the government spring budget statement are released.
US TSYS: Yesterday’s Modest Gains Reversed In Today’s Asia-Pac Session
In today's Asia-Pac session, TYM5 is 110-19, -0-05 from closing levels.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains.
- Us tsys ended in the green, recovering from early weakness, with fears over a slump in the economy underpinning a small haven bid. Bottom fishers also provided support.
- Wednesday's focus is on Durables/Cap Goods, Tsy 5Y Sale and Fed Speak: MN Fed Kashkari Fed listens event (no text, Q&A) at 1000ET, StL Fed Musalem on economy/policy (text, Q&A) at 1310ET.
BONDS: NZGBS: Closed At Session Bests But Only Slightly Richer
NZGBs closed on a strong note, with benchmarks flat to 1bp richer after being 2bps cheaper early.
- The NZGB 10-year outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials respectively 1bp and 3bps tighter. Nevertheless, at +21bps, the NZ-US 10-year differential hovers just below the widest level for the year and back at November 2024 levels.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains.
- Swap rates closed flat to 1bp lower.
- RBNZ dated OIS pricing closed flat to 3bps softer across meetings, with February 2026 leading the move. 24bps of easing is priced for April, with a cumulative 67ps by November 2025.
- The local calendar was empty today and will remain so until Friday's ANZ Consumer Confidence and Filled Jobs data release.
- Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 5.00% May-54 bond.
- The NZ Treasury also plans to offer NZ$2bn of bonds in April, NZ$500mn each week. By April 30, a syndicated tap of the existing May 2032 nominal bond will be undertaken.
