OIL: India Investigating Three Potential New Strategic Oil Reserves
India is exploring three potential new strategic oil reserves to boost emergency stockpiles and strengthen energy security, according to of Indian Strategic Petroleum Reserves Ltd cited by Reuters.
- India is seeking to raise SPR capacity and diversifying its crude sources to protect against any global supply disruption with dependence on imports for over 80% of its oil requirements.
- A new 5.2m-5.3m ton reserve is planned at salt caverns at Bikaner in Rajasthan, a 1.75m ton facility at Mangalore in Karnataka state, and a reserve in Bina, central Madhya Pradesh state, with capacity yet to be decided.
- Engineers India is doing feasibility studies to build the new reserves which will then require approval from the federal cabinet.
- ISPRL currently operates three SPRs in southern India at Mangalore, Padur and Vizag, with a combined capacity of about 5.33m tons.
- The plans are in addition to 4m tons of strategic storage at Chandikhol in Odisha and 2.5m ton at Padur which have already been approved.
- India aims to raise capacity from 75 days of crude oil and refined fuels storage with IEA membership requirements for a minimum of 90 days of consumption.
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ECB: ECB Speak Wrap (May 27 – June 2)
See here for the full publication: 250602 - Weekly ECB Speak Wrap.pdf
The ECB has entered its pre-meeting quiet period ahead of Thursday’s decision, where a 25bp cut remains unanimously expected a fully priced by markets. MNI’s preview will be out later this week.
The MNI Policy Team’s latest sources piece headlines the past week’s ECBspeak. The ECB is likely to lower its inflation projection for 2026 to 1.7% or 1.8% in its June exercise, one or two tenths below the 1.9% seen in March, Eurosystem sources told MNI, adding that there could be a pause in rate cuts after a further 25-basis-point reduction next week. Despite this downward revision, this deviation below 2% will not be considered strong enough to automatically trigger an additional rate cut beyond the June meeting, as some of the drivers of this inflation revision could reverse course given uncertainty over international trade, sources said.
- This somewhat more cautious approach once rates reach 2.00% - the middle of the ECB’s heavily caveated neutral range – will likely be strongly advocated by hawkish leaning Governing Council members. On May 28, Knot said that “a monetary policy stance that is neither accommodative nor restrictive is in my view appropriate”.
- However, there is still scope for more cuts depending on the macroeconomic data and trade outlook. Speaking to the MNI Policy Team, acting Central Bank of Malta Governor Demarco (May 27) said that “if headline inflation in the medium term is expected to remain persistently well below 2% then it is more likely that there is room for interest rates to fall below 2%”.
OUTLOOK: Price Signal Summary -Bull Cycle In Bunds Remains In Play
- In the FI space, a bullish theme in Bund futures remains intact and the contract is holding on to its latest gains. The recent recovery suggests the move down between Apr 22 - May 15, has been a correction. A continuation higher would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Key short-term support to watch is 129.13, the May 15 low. First support lies at 130.39, the May 29 low.
- A bear cycle in Gilt futures remains in play. The contract has recovered from its recent lows - gains are considered corrective and this is allowing a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Jun03 $1.1348-50(E3.2bln), $1.1350-55(E1.2bln); Jun05 $1.1050(E5.9bln), $1.1300(E2.3bln), $1.1400(E2.2bln)
- USD/CAD: Jun04 C$1.3735-50($1.2bln)
