OIL: Mid-Day Oil Summary: Crude Steady
Nov-18 12:02
Crude front month is relatively steady as the market weighs geopolitical risks against ongoing oversupply concerns.
- Brent JAN 26 up 0.1% at 64.25$/bbl
- WTI DEC 25 up 0.2% at 60.01$/bbl
- Conflict is impacting fuel output in Russia and Sudan, while Iran’s redirection of a tanker in the Gulf of Oman into its own waters increases the risk to shipments travelling through the area.
- Russia’s Novorossiysk port resumed oil loadings on Sunday after a two-day suspension to help ease upside price pressure although risks remain as Ukraine continues to strike ports and refineries.
- The grace period before the introduction of sanctions on Russia’s Rosneft and Lukoil ends in a few days as the market weighs the impact on global flows. The discount on Russia’s Urals benchmark is the highest since June 2023, according to Bloomberg.
- India’s Reliance has purchased 1m bbl of heavy crude from Kuwait Petroleum Corp via a tender, four trade sources told Reuters.
- China’s Yanchang Petroleum has bought 3mbbl of crude from the UAE and Kazakhstan for Jan. delivery, Reuters sources said, after suspending Russian oil purchases.
- China’s surplus of crude oil was up to about 690kb/d in October from 570kb/d in Sep compared to about 900kb/d in Jan-Oct.
- Expanding sanctions on Chinese ports and refiners are choking flows of Russian and Iranian oil to China, though emerging workarounds suggest the slowdown may be fleeting, Bloomberg reports.
- The expected oversupply in the oil market has not yet materialised, although this may soon change, Commerzbank said in a note.
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
