OIL: Oil End of Day Summary: Crude Falls
Feb-28 19:26
Crude prices have reversed some of the gains seen yesterday after further threats from President Donald Trump around tariffs on China, Mexico and Canada. Demand uncertainty and a stronger US dollar are weighing on pricing.
- WTI APR 25 down 0.7% at 69.88$/bbl
- US oil rig count according to Baker Hughes: 486 (-2) - down 18 rigs, or 3.6% on the year.
- The US and Ukraine did not sign a deal on developing the country’s natural resources, according to a US official.
- President Trump said in a Truth that after their tense meeting he has “determined that President Zelenskyy is not ready for Peace”.
- US tariffs of 10% on Canada energy are still planned to be implemented on March 4, impacting around 4mbd to US refiners.
- Canadian crude oil and equivalents production surged to record levels in December, driven by record exports, OPIS said, cited by Bloomberg
- The number of fires is down from 60 at the same time last year, Todd Loewen, Alberta minister of forestry and parks, says in news release, cited by Bloomberg
- Russian ESPO flows to China are set to rebound in March.
- Russian oil flows into India have shown further signs of slipping in February as Washington has ramped up sanctions.
- Saudi Aramco may cut the Arab Light OSP to Asia by about $0.15/bbl in April to a premium of $3.75/bbl to the Oman-Dubai benchmark, according to a Bloomberg survey.
- Launch of Oldelval’s pipeline expansion expected to allow for 30% boost in Vaca Muerta output this year, Platts reports.
- Goldman Sachs predicts that Brent crude oil prices will remain within a range of $70 to $85 per barrel in 2025.
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STIR: Modest Hawkish Tilt On FOMC Statement
Jan-29 19:15
- Fed Funds implied rates see a modest climb on the FOMC statement, to extend the day’s increase, mainly helped by the removal of the reference to inflation making progress line.
- Odds of a cut next meeting are further trimmed to 6.5bp vs 7.5bp prior and a next 25bp cut tilts a little more towards July over June (June to 24bp vs 26bp prior).
- There are 45bp of cuts priced for 2025 vs 47bp pre-release and 50bp this morning (which had aligned with the median dot last month).
FED: Statement: Surprise Hawkish Removal Of "Progress" In Inflation
Jan-29 19:12
See below for a comparison of the new FOMC Statement to the previous one released in December.
- The new Statement contains a hawkish-leaning surprise.
- While it was somewhat expected that the language on the labor market would change to reflect recent stabilization in conditions and the unemployment rate, we did not see many expectations that they would change the language characterizing inflation.
- They removed "has made progress toward the Committee's 2 percent objective", while retaining language saying that it "remains somewhat elevated".
- Arguably this is the most hawkish the language has been on inflation since "In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective." (May 2024). In the meetings since then, they have noted "progress" on the inflation front, but not this time. The Statement introduced the "has made progress" toward 2% in November's statement, so that lasted for two meetings.
- This will be a key question for Powell at the presser.
US TSYS: Post-FOMC React: Yields Rebound With US$
Jan-29 19:08
- Treasuries gap lower after the FOMC left rate steady but removed reference to making progress towards inflation reaching goal. Guidance unchanged.
- Currently, the Mar'25 10Y contract trades -8 at 108-25 vs. 108-23.5 low, still well above initial technical support of 108-00/107-06 (Low Jan 16 / 13 and the bear trigger). 10Y yield climbs to 4.5790% high. Curves moving off flatter levels, 2s10s -.477 at 32.853 vs. 31.733 low.
- Cross asset update, BBG US$ index rebounds, currently +1.27 at 1302.46 from midday low of 1300.25; Gold weaker (2745.75 -17.74); Stocks near; prior lows (after Nvidia export curbs to Chima headlines) SPX Eminis at 6056.5 -40.0.
