OIL: Oil End Of Day Summary: Crude Falls
Sep-05 18:09
Crude has fallen further today and is on track for a net decline on the week amid concerns that this weekend's OPEC+ meeting could result in further supply.
- Brent NOV 25 down 2.3% at 65.46$/bbl
- WTI OCT 25 down 2.7% at 61.79$/bbl
- Bloomberg report that Saudi Arabia wants to consider reviving another tranche of 1.66m b/d of halted supplies at the Sunday meeting.
- Russia’s Deputy PM Novak said that OPEC+ is not currently discussing a hike and that OPEC+ will look at the situation as a whole before making a decision at the meeting on Sunday.
- Bloomberg’s Javier Blas said a supply increase seems more likely to be approved when the full OPEC group meets in October/November, rather than on Sunday.
- President Donald Trump yesterday warned of consequences for Russia if President Vladimir Putin doesn't agree to a meeting with Ukrainian President Volodymyr Zelenskyy. He also pushed European leaders to stop purchases of Russian oil.
- Ukrainian President Zelenskiy said European and US teams are set to meet regarding sanctions on Russia within days.
- The build in China oil inventories will slow in Q4 pushing the oil market into a sizeable surplus and likely putting downward pressure on prices, according to ANZ cited by Bloomberg.
- North Sea spot differentials are starting to recover, and the trend is likely to continue amid strengthening refining margins, according to Sparta Commodities cited by Bloomberg.
- Crude Dec25-Dec26 backwardation continues to soften today in line with the bearish pressure on front month prices ahead of the OPEC+ 8 meeting on Sep.7.
- OPEC+ Roundup: https://media.marketnews.com/OPEC_Roundup_9c456e541d.pdf
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OPTIONS: Upside-Leaning Structures In European Rates
Aug-06 18:09
Wednesday's Europe rates/bond options flow included:
- RXV5 131/130/129p fly, bought for 15.5 in 2k.
- ERH6 99.0/99.50 call spread, bought for 0.75 in 10k
- SFIQ5 96.15/96.20 call spread saw paper pay 1.0 on 7K
- SFIZ5 96.55/96.75cs, bought for 2 in 2k
- SFIZ5 96.60/96.80/97.00/97.20c condor sold at 0.75 in ~1.3k with SFIZ5 96.50/96.70cs, sold at 2.25 in ~2.88k
- SFIM6 96.75/97.50/98.25c fly, bought for 10.25 in 8k
- SFIM6 97.00 calls paper paid 8.75 on 4K vs. 96.535
EURGBP TECHS: Rebound Signals A Bullish Turn
Aug-06 18:00
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
- RES 1: 0.8735/8769 High Aug 3 / High Jul 27 and the bull trigger
- PRICE: 0.8723 @ 16:09 BST Aug 6
- SUP 1: 0.8611 Low Jul 31
- SUP 2: 0.8597 50-day EMA
- SUP 3: 0.8540 Low Jun 30
- SUP 4: 0.8508 Low Jun 27
The trend set-up in EURGBP is bullish and the latest recovery from last Thursday's low signals the end of the short corrective pullback between Jul 28 - 31. Moving average studies remain in a bull-mode position highlighting a clear uptrend. Key resistance and the bull trigger is at 0.8769, the Jul 27 high. On the downside, support to watch lies at the 50-day EMA 0.8601. A clear break of it would strengthen a bear threat.
FOREX: USD Resumes Spell of Weakness on Fed Speculation, Technical Break
Aug-06 17:58
- The USD resumed the recent spell of weakness Wednesday, helping the ICE USD Index through the post-NFP low. Prices have also broken interim support at the 50-dma - a level that had drawn notable focus through the YTD downtrend and helped define the downtrend. EUR/USD topping the Friday high and layered resistance between 1.1597-00 further triggered USD selling.
- Interjections from potential next Fed chair Hassett helped weigh on the USD, as he voiced his support for a more Greenspan-like approach to policymaking, with a lesser focus on consensus-forming. This led markets to more quickly price in rates conforming to Trump's preference for easy policy. A later Bloomberg report that suggested Trump was being advised to appoint an interim Fed governor that can skip the Senate nomination process made little impact on pricing - although the expedited timeline could mean a new Trump appointee is installed ahead of the September rate decision.
- Resilient GBP/USD comes despite the NIESR estimates out earlier today that suggests the government are facing a more dire fiscal picture in Autumn than previously expected - suggesting markets are well priced for sharp spending cuts and/or tax rises at the next Budget. Instead, it's the BoE decision Thursday that could be of more consequence, and in particular the vote split: 2-5-2 (50bps cut, 25bps cut, unch) is the modal consensus - and we flag that the baseline projections may become less
useful as a communication tool going forward - and as such, less market relevant. EUR/GBP remains in a nascent uptrend, evident in the recovery from last Thursday's low. Key resistance and the bull trigger remains at 0.8769, the Jul 27 high. - Focus Thursday turns to the ECB's economic bulletin, US weekly jobless claims and unit labor costs and the latest Chinese trade balance numbers. Fed's Bostic is due to be addressing monetary policy shortly after the BoE rate decision.
