OIL: Oil End of Day Summary: WTI Slips
Jan-06 19:29
WTI is on track for losses today, ending a recent rally. The market is still weighing up sluggish Chinese demand and the eventual return of OPEC barrels against a weaker USD.
- WTI FEB 25 down 0.5% at 73.57$/bbl
- The WTI prompt spread has traded at its highest level since December, according to Bloomberg data.
- Saudi Arabia raised its February Arab Light OSP to Asia by $0.6/bbl to +$1.50/bbl for Asia.
- Seaborne crude flows in December fell amid sharp reductions from the USGC and from some OPEC+ producers, Bloomberg said.
- OPEC output fell 120k b/d to 27.05m b/d, with most of the drop coming from the UAE, Bloomberg said.
- Rising OPEC and non-OPEC supply is expected to outpace demand growth leading to an oil market surplus of 700kb/d in 2025, Morgan Stanley said.
- OPEC+ has little margin for reinstating barrels this year with hard choices if they want to preserve the current $70/bbl floor in Brent, Onyx’s Harry Tchilinguirian said.
- The US added 1.8m bbl of crude to the SPR in Dec, with a total of 39.4m bbl added in 2024, the DoE said, cited by OPIS.
- US crude oil inventories are expected to have fallen by 0.3m bbl in the week to Jan. 3, according to a Reuters survey.
- Iranian crude oil supply is predicted to see a modest decrease of 0.3mb/d to 3.25mb/d by Q2 2025 amid expected tighter sanctions under the Trump administration, Goldman Sachs said.
- Mexico’s President Claudia Sheinbaum announced the Mexican state power company CFE will convert a power plant in Tula from fuel oil to natural gas, Bloomberg said
- “It is likely that global oil markets will see a building surplus of crude,” Eurasia Group analysts said in a Jan. 6 note.
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MNI UST Issuance Deep Dive: Dec 2024 (2/2)
Dec-06 21:53
Throughout November’s policy and market volatility, though, Treasury auctions largely impressed, with 5 of 7 nominal coupon sales trading through.
- Auction Results: November’s nominal coupon auctions were generally strong, with five out of seven auctions trading-through, of which four saw a positive reading on MNI’s Relative Strength Indicator (RSI). The remaining two auctions; 3 and 20-year auctions tailed. See page 2.
- Upcoming Supply: Issuance resumes next week with sales of $58B in 3Y Note, $39B in 10Y Note (reopen), and $22B in 30Y Bond (reopen). December is set to see $15B in nominal Treasury coupon sales, in addition to $22B in 5Y TIPS and $28B FRN for a total of $365B – slightly below the Oct and Nov totals of $369B which were joint-highest since Oct 2021.
- MNI's review includes a calendar of upcoming auctions and buyback operations.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: Dec 2024 (1/2)
Dec-06 21:51
MNI's latest US Treasury Issuance Deep Dive has just been published (PDF link here):
November proved a dramatic month for Treasuries. Yields were volatile before and after the Nov 5 election - after ending October at 4.28%, 10Y yields peaked at five-and-a-half-month high just above 4.50% mid-month before closing November just below 4.18%, as markets attempted to price in the implications of a Republican “sweep”.
- Also buffeting rates was speculation over the would-be successor to Treasury Secretary Yellen. President-elect Trump’s selection of hedge fund manager Scott Bessent was greeted with bull flattening in the curve, implying perhaps that he’s seen as more cautious on fiscal deficits than some of the alternatives (he has expressed support for halving the annual budget shortfall to 3% of GDP).
- The first quarterly Refunding process of Bessent’s Treasury is in early February, by which point we may start to have a better sense of the incoming administration’s approach to both fiscal policy and to more issuance-specific considerations such as duration management.
- Bessent for instance has argued that Yellen’s Treasury erred from a risk management perspective by boosting short-duration issuance, and there are suggestions he would be in favor of reversing course, telling Bloomberg in June “When rates are very low, you should extend duration…I think it’s very unfortunate what Secretary Yellen’s doing. She’s financing at the front end, and she’s making a bet on the carry trade, which is not good risk management.”
US LABOR MARKET: MNI US Employment Insight: Soft Enough To Keep Fed Cutting
Dec-06 21:05
Our latest Employment Insight has just been published and emailed to subscribers.
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