OIL: Oil End of Day Summary: WTI Rallies
WTI crude has rallied in US hours following headlines on Trump’s decision via a vis Russia sanction, even though it was in keeping with his earlier 10–12-day timeframe.
- WTI SEP 25 up 3.8% at 69.25$/bbl
- The Bloomberg headline read: “Trump gives Russia 10 days to reach agreement with Ukraine”
- EIA Crude Surveys (bbl): -2.0m (Bbg), -1.6m (WSJ)
- Trump said yesterday that he would bring the ceasefire deadline forward to 10-12 days. He appears to have lost patience with Russian President Putin saying he’s “not so interested in talking any more” after the latter has said one thing and done another.
- Bessent: told Chinese officials that given US secondary tariff legislation on sanctioned Russian oil, China could face high tariffs if it continues to purchase it
- The OPEC-8 meeting on August 3 to decide its output target for September remains in focus after the JMMC yesterday ended with no policy recommendations.
- Another round of US-China talks in Stockholm are ongoing with expectations that a tariff truce will be extended, laying the groundwork for a Trump-Xi meeting later this year.
- The Trump administration’s reported decision to allow Chevron to resume production of crude oil in Venezuela might be driven by tight domestic supply conditions, Commerzbank said.
- Iraq's Kurdistan oil production reached around 120kb/d and expected to rise to an average of 280kb/d by mid-August, according to Reuters.
- Pemex’s crude exports fell to their lowest level since 1990 at 458k b/d in June, Bloomberg reported.
- Bloomberg cites BBVA analyst Arnulfo Rodriguez Hernandez’s note to clients noting Pemex’s slight rise in oil production in 2Q from 1Q was driven by increased production of super light crude and condensates.
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
