POWER: Italian Hydro Stocks Fall But Narrow Deficit On Year
- Italian hydropower reserves last week – calendar week 3 – fell at their fastest pace this year from the previous week, dropping by 0.11TWh to 2.75TWh, however, stocks narrowed their deficit to the same week in 2024.
- Reserves narrowed their deficit to the same week in 2024 to 0.18TWh from 0.20TWh in week 2.
- But stocks stood just 0.04TWh above the five-year average last week after being at a 0.06TWh surplus the week prior
- There was no precipitation in Torino near Italy’s hydro-intensive region last week, limiting inflows into reserves again. This is below the 30-year norm.
- Looking ahead, the latest ECMWF weather forecast for Torino suggests precipitation to just total 22.3mm over 20-26 January.
- Italy’s hydro balance is forecast to end this week at -3.71TWh on 26 January, up from -3.72TWh in the previous forecasts. The balance is further expected to end at -3.26TWh on 6 February.
Wind generation in Italy for the remainder of this week is forecast between 0.514-1.95GW or 5-18% load factors, with output early next week at just 25-34% load factors over 27- 28 January, according to SpotRenewables.
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BONDS: Off Lows As Oil Edges Lower
Core global FI markets away from session lows, seemingly driven by some weakness in crude oil and bears failing to push 10-Year Bund yields meaningfully above month-to-date highs.
- Depleted liquidity into the Christmas break also a likely factor when it comes to the scale of move on limited headline drivers.
- Benchmark U.S., German & UK yields all still higher on the day, with UK spreads wider across the curve.
US: Biden Admin Launches New Probe Into Chinese 'Legacy' Semiconductors
US President Joe Biden’s Trade Representative, Katherine Tai, announced that the White House has launched an investigation into Chinese-made "legacy" semiconductors that could result in additional tariffs on 'mature-technology' chips that power autos, appliances, medical devices and other goods, according to Tai.
- Tai said the investigation comes because, “China’s rapid, state-driven expansion of semiconductor output is artificially lowering chip prices,” adding that the probe is, “based on evidence that China is using anti-competitive, non-market policies to dominate global chip production.”
- Tai said: "This is enabling its companies to rapidly expand capacity and to offer artificially lower priced chips that threaten to significantly harm and potentially eliminate their market-oriented competition.”
- Reuters reports: “The "Section 301" probe, launched just four weeks before President-elect Donald Trump takes office on Jan. 20, will be handed over to his administration in January for completion, Biden administration officials said. The effort could offer Trump a ready avenue to begin imposing some of the hefty, 60% tariffs that he has threatened on Chinese imports.”
COMMODITIES: Recent Gains in WTI Futures Still Considered Corrective
A bearish threat in WTI futures remains present and recent gains are - for now - considered corrective. A resumption of the bear cycle would open $65.57, the Oct 1 low, and $63.73, the Sep 10 low and key support. For bulls, a stronger reversal to the upside would instead refocus attention on the key short-term resistance at $76.41, the Oct 8 high. Initial firm resistance to watch is unchanged at $71.97, the Nov 7 high. Gold traded sharply lower on Dec 18. The move down undermines a recent bullish theme. A resumption of weakness would signal scope for an extension towards the key support at $2536.9, the Nov 14 low. Moving average studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2642.9, the 20-day EMA. A breach of this EMA would be positive for bulls.
- WTI Crude up $0.36 or +0.52% at $69.83
- Natural Gas up $0.16 or +4.14% at $3.896
- Gold spot up $4.25 or +0.16% at $2627.82
- Copper up $2.25 or +0.55% at $412.3
- Silver up $0.22 or +0.75% at $29.7515
- Platinum up $11.14 or +1.2% at $939.11
