OIL: Oil End of Day Summary: Crude Loses Ground on Week
WTI is slightly higher today but holding within yesterday’s and remains set for a net weekly decline. Talk of another large OPEC+ hike added pressure, although Trump’s comments that he no longer intends to drop sanctions on Iran were supportive.
- WTI AUG 25 up 0.3% at 65.45$/bbl
- OPEC+ is set to consider extending its run of super-sized production hikes at next month’s meeting, Bloomberg reported.
- Donald Trump said in a Truth post that he is no longer looking at dropping sanctions on Iran and that the country must get back to the World Order Flow.
- CNN reported before the Trump Truth that the US had discussed the lifting of sanctions on Iran as a possible incentive to begin talks, CNN reports, as an Iranian law comes into place to suspend cooperation with the UN Nuclear watchdog.
- Iran’s Foreign Minister said no agreement had been reach for the resumption of talks with the US, IRNA said.
- China’s imports of Iranian crude surged in June despite the conflict, vessel tracking shows.
- The probability of major oil supply disruption has fallen to below 4%: Goldman Sachs.
- Russia is open to another output hike at the next OPEC+ meeting if the group deems it necessary, a Bloomberg source said.
- Market focus is also shifting from the Iran-Israel tensions to any possibility of a trade agreement between the US and China ahead of the July 9 deadline.
- The EU and US are confident they will reach a tariff deal by the deadline, Bloomberg reports.
- The US will not complete scheduled crude oil SPR deliveries until the end of the year due to maintenance.
- Baker Hughes rig count: Oil: 432 (-6) - down 47 rigs, or 9.8% on the year.
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Historical bullets
MNI: Fed should take cautious approach - may minutes
- MNI: FED SHOULD TAKE CAUTIOUS APPROACH - MAY MINUTES
- FED: WELL POSITIONED TO WAIT FOR MORE CLARITY ON OUTLOOK
- FED: TARIFFS BOOST RISKS TO INFLATION, EMPLOYMENT
EURGBP TECHS: Fresh Short-Term Cycle Low
- RES 4: 0.8557 High Apr 28
- RES 3: 0.8541 High May 2
- RES 2: 0.8493 High May 9
- RES 1: 0.8447 50-day EMA and a key near-term resistance
- PRICE: 0.8387 @ 16:19 BST May 28
- SUP 1: 0.8373 Low May 27
- SUP 2: 0.8359 1.236 proj of the Apr 11 - 16 - 21 price swing
- SUP 3: 0.8316 Low Mar 28 and a key support
- SUP 4: 0.8277 1.618 proj of the Apr 11 - 16 - 21 price swing
A bear cycle in EURGBP remains in play and a fresh cycle low yesterday reinforces this theme. Resistance to watch is at the 50-day EMA at 0.8447. A clear break of this average is required to highlight a stronger reversal and shift attention to resistance at 0.8541, the May 2 high. On the downside, a resumption of the downtrend would pave the way for a move towards 0.8359, a Fibonacci projection.
BONDS: EGBs-GILTS CASH CLOSE: Yields Continue To Back Up
European yields backed up Wednesday, continuing their rise from Tuesday's lows, with Gilts underperforming Bunds.
- A soft long-end Japanese bond auction overnight set a weaker tone for global core FI early.
- In data, ECB 1-year ahead inflation expectations surprisingly rose but longer-term expectations were steady, muting the impact.
- On the day, the UK curve leaned bear steeper to the 10Y segment, with 30Y outperforming. The German curve more clearly bear steepened.
- BTPs led broader gains in much of the session, with 10Y yields falling to the lowest levels since February. 10-year EGB periphery/semi-core spreads tightened 0.3-1.0bps vs Bunds on the day.
- Thursday's calendar includes an appearance by BOE's Bailey; in data we get Spanish retail sales, and Italian confidence indicators and industrial sales.
- Attention for the week is on Friday's flash May inflation readings from Germany, Italy and Spain.
Closing Yields / 10-Yr EGB Spreads To Germany:
- Germany: The 2-Yr yield is up 0.6bps at 1.797%, 5-Yr is up 1.4bps at 2.107%, 10-Yr is up 2.2bps at 2.554%, and 30-Yr is up 2.9bps at 3.031%.
- UK: The 2-Yr yield is up 5.5bps at 4.075%, 5-Yr is up 5.4bps at 4.206%, 10-Yr is up 6.1bps at 4.727%, and 30-Yr is up 4.5bps at 5.48%.
- Italian BTP spread down 0.4bps at 98.1bps / French OAT down 0.5bps at 67.3bps
