OIL: Oil End of Day Summary: Crude Rises
Crude has risen today amidst heightened tensions between Israel and Hamas and the threat of the ceasefire collapsing, raising the risk of regional escalation. The market is also weighing the impact of US tariffs and risks of sanctions tightening supplies.
- WTI MAR 25 up 1.5% at 73.37$/bbl
- Israeli Prime Minister Benjamin Netanyahu has warned of a "return to intense fighting" if Hamas does not return Israeli hostages by Saturday. The Jerusalem Post reports that the decision was reached unanimously by the Israeli Security Cabinet
- EIA crude inventory surveys: +2.5m bbl (bbg), +2.4m bbl (WSJ), 3m bbl (Reuters).
- The EIA has kept its forecast for global oil demand in 2025 stable at 104.1m b/d, according to its February Short-Term Energy Outlook.
- A tighter supply outlook due to stricter sanctions is supportive as Middle East producers raise prices to customers for March loading, Bloomberg said.
- Charles Kennedy writes that Chevron is betting on the multi-billion acquisition of Hess Corp to boost its assets with high-quality Guyana acreage where billions of barrels of oil equivalent have been discovered.
- Indian oil is buying Russian oil cargoes without the involvement of sanctioned entities the companies chairman A S Sahney said at India Energy Week.
- Russia’s seaborne crude shipments fall suggesting further signs of disruption after the latest US sanctions announced on Jan. 10.
- Saudi Arabia crude flows to China are set to slip in March m/m trade sources have said to Reuters.
- Equinor’s Johan Sverdrup field suffered a power outage, which was estimated to last until 16:15GMT, according to Nord Pool.
- One of the recently sanctioned Russian tankers with a cargo on board has been floating off India for two days according to Bloomberg tracking
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Historical bullets
GBPUSD TECHS: Bearish Trend Sequence
- RES 4: 1.2672 50-day EMA
- RES 3: 1.2607 High Dec 30
- RES 2: 1.2533/2576 20-day EMA / High Jan 7
- RES 1: 1.2367 High Jan 9
- PRICE: 1.2208 @ 19:13 GMT Jan 10
- SUP 1: 1.2187 Low Nov 10 2023
- SUP 2: 1.2138 Low Nov 2 ‘23
- SUP 3: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
- SUP 4: 1.2037 Low Oct 4 ‘23 and a key support
The trend condition in GBPUSD remains bearish and last week’s sell-off reinforces the bear trend - the break lower confirms a resumption of the downtrend. The move down also marks an extension of the price sequence of lower lows and lower highs. Note too that moving average studies are in a bear-mode position highlighting a dominant bear trend. Sights are on 1.2187 next, the Nov 10 2023 low. Initial resistance is at 1.2367, the Jan 9 high.
EURUSD TECHS: Bearish Trend Sequence
- RES 4: 1.0630 High Dec 06
- RES 3: 1.0513 50-day EMA
- RES 2: 1.0437/58 High Jan 6 / High Dec 30
- RES 1: 1.0358 High Jan 8
- PRICE: 1.0239 @ 18:56 GMT Jan 10
- SUP 1: 1.0215 Intraday low
- SUP 2: 1.0201 61.8% of the Sep ‘22 - Jul ‘23 bull leg
- SUP 3: 1.0151 2.0% 10-dma envelope
- SUP 4: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
The trend condition in EURUSD remains bearish and recent short-term gains have proved to be a correction. Friday’s move lower resulted in a print below 1.0226, the Jan 2 low. A clear break of this level would confirm a resumption of the downtrend and mark an extension of the price sequence of lower lows and lower highs. Sights are on 1.0201 next, a Fibonacci retracement point. Resistance to watch is 1.0458, the Dec 30 high.
US TSYS: Strong Jobs & Unemployment Rate Dip Dashes Rate Cut Hopes
- Treasuries gapped lower after Friday morning's larger than expected December non-farm and private payroll gains while unemployment dipped slightly.
- The 256k in December leaves a strong recent trend, with 255k in Sep, an average of 128k for those two months (initially 132k) before surprisingly reaccelerating again. Unemployment rate: 4.086% in Dec after very small downward revisions in the prior two months, with 4.23% in Nov (initially 4.246%) and 4.14% in Oct (initially 4.15%).
- The Dec'24 10Y contract traded down to 107-12 low (-27) well through technical support of 107-19.5 (1.618 proj of the Oct 1 - 14 - 16 price swing) next level: 107-04 (Low Apr 25 ‘24 and a key support). Curves bear flattened but finished off lows, 2s10s -3.937 at 38.383 vs. 36.572 low, 5s30s -9.612 at 37.484. 10Y yield taps 4.7860 - highest since May 2022.
- Futures retreated towards post data lows late in the session while projected rate cuts through mid-2025 have retreated since this morning's data, current vs. morning levels* as follows: Jan'25 at -0.7bp (-1.7bp), Mar'25 -6.3bp (-10.1bp), May'25 -10.5bp (-15.9bp), Jun'25 -18.2bp (-25.6bp), Jul'25 -20.2bp (25.5bp).
- Next week brings CPI and PPI inflation measures on Wednesday and Thursday respectively, the scheduled Fed speaker docket rather muted with the Fed Blackout next Friday.
