OIL: Oil End of Day Summary: Crude Rises
Jan-16 19:21
Crude prices edge higher after the pull back from a high on Jan. 14. The market is weighing geopolitical risk in Iran amid a build-up of US forces in the region against oversupply risks.
- WTI FEB 26 up 0.7% at 59.59$/bbl
- Baker Hughes oil rig count: 410 (1) - down 68 rigs, or 14.2% on the year.
- Axios reports that Israeli officials think that despite the delay, a U.S. military strike could take place in the coming days.
- There is no shortage of Iranian oil in the market, with Iranian crude in transit conservatively estimated at around 80m bbl, Platts said.
- Trafigura is preparing to discharge its first cargo of Merey 16 oil at the Bullen Bay terminal in Curacao to store oil for possible future distribution to international markets.
- Venezuela’s acting President Rodríguez presented a reform to the nation’s hydrocarbons law to create two funds for dollar investment funds from oil sales.
- The US DoE is exploring a plan to exchange heavy Venezuelan oil for US medium sour crude to fill up the SPR, sources told Reuters.
- US involvement in Venezuela could lower regional risk and indirectly benefit Guyana’s booming offshore oil sector, Platts said.
- Kazakhstan redirected about 300k mt of oil to alternative routes in December due to lower loading from the CPC terminal, KazMunayGas said.
- An oil tanker had an engine failure and required assistance in Turkey’s Dardanelles Strait, Bloomberg reports citing a local port agent report.
- Bloomberg’s fair value model pegs Brent at about $64/b, suggesting limited upside as long as geopolitical tensions with Iran stop short of actual supply disruption.
- 2026 is set to mark a record for tanker fleet growth: Kpler
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US DATA: Mortgage Spreads Continue To Narrow, But MBA Activity Stays Weak
Dec-17 19:20
MBA mortgage application activity softened slightly in the latest week, but the more notable trend in recent weeks has been a continued narrowing of mortgage rate spreads.
- The MBA composite fell 3.8% W/W in the week of Dec 12, partially reversing the 4.8% rise the previous week but keeping activity at the overall subdued levels seen since late 2023 (at 1/3 below pre-pandemic levels). Purchase applications fell 2.8% for a 2nd consecutive fall, while refinancing apps pulled back 3.6% after soaring 14.3% the prior week.
- This pullback came as 30Y conforming mortgage rates ticked up, by 5bp to 6.38% for a 3-week high; Jumbo rates dipped 2bp after a 6bp rise the prior week.
- But this was due to a rise in underlying rates. 10Y Treasury yields averaged 7bp higher than the prior week (4.17% after 4.09%) with 30Y up 6bp (4.81% after 4.75%), with 10Y swaps up 8bp (3.76% after 3.68%).
- As such, mortgage spreads continued to fall. Conforming 30Y mortgage spreads to 10Y fell to 221bp and to 30Y to 157bp with spreads to 10Y swaps at 261bp, all the lowest since early 2022.
EURGBP TECHS: Remains Above Support
Dec-17 19:00
- RES 4: 0.8865 High Nov 14 and a bull trigger
- RES 3: 0.8840 High Nov 20
- RES 2: 0.8818 High Nov 26
- RES 1: 0.8802 High Dec 2 and a key near-term resistance
- PRICE: 0.8775 @ 16:31 GMT Dec 17
- SUP 1: 0.8721 Low Dec 9
- SUP 2: 0.8706 76.4% retracement of the Oct 8 - Nov 14 bull leg
- SUP 3: 0.8670 Low Oct 21
- SUP 4: 0.8656 Low Oct 8 and a key support
The bull cycle in EURGBP that started on Dec 9 highlights a possible reversal of the corrective phase between Nov 14 - Dec 9. Key short-term support has been defined at 0.8721, the Dec 9 low. A break of this level would signal scope for a deeper retracement, towards 0.8706, a Fibonacci retracement. Initial firm resistance to watch is unchanged at 0.8802, the Dec 2 high. Clearance of this hurdle would be a bullish development.
ECB: Macro Since Last ECB - Inflation: Firmer Services Helped By Package Hols
Dec-17 18:55
- The ECB has received a reasonable amount of new information on HICP inflation since its last meeting although it’s unlikely to have materially altered its outlook.
- Headline HICP inflation has modestly cooled since September (from 2.24% Y/Y to 2.10% in Oct and 2.14% in today’s final November data) whilst core has firmed slightly (from 2.35% to 2.37% in Oct and 2.41% in Nov). Headline was trimmed very slightly from 2.16% in the flash release whilst core was completely unchanged at 2.41%.
- Further within the details, services inflation accelerated to 3.47% Y/Y in November from 3.24% in September for its fastest since April, a little higher than consensus but mostly outweighed by core goods inflation undershooting at 0.55% Y/Y.
- The final November report confirmed as generally expected that package holidays had played a role in the further services acceleration, jumping from 0.91% to 4.42% Y/Y in November. Other travel-related categories were more mixed, with accommodation firming from 3.14% to 3.41% but airfares swinging from 1.66% in Oct to -2.74% in Nov (national level data were unclear on the extent to which this reversed).
- As for more recent 3M/3M trend rates, core inflation momentum was 2.35% annualised in November, a pullback from 2.62% in October to leave it unchanged from the 2.35% the ECB had seen for September ahead of the last meeting (a figure that currently shows as 2.31% in the latest vintage). Services momentum has firmed on net though, at 3.36% in Nov after 3.59% in Oct and 2.89% in Sept.
