OIL PRODUCTS: Oil Products End of Day Summary: Cracks Weaken
May-22 18:20
US diesel and gasoline cracks have softened this week with added pressure from unexpected stock builds due to higher production and a drop in implied fuel demand.
- US gasoline crack down 0.4$/bbl at 26.64$/bbl
- US ULSD crack down 0.8$/bbl at 26.2$/bbl
- Unexpected US stock builds in EIA data released yesterday due to higher production and a drop in implied fuel demand has added downside pressure to fuel prices.
- ARA stocks according to Insights Global: Gasoil: -31k mt to 2,184k mt, Gasoline: -106k mt to 1,107k mt, Fuel Oil: +14k at 1,102k mt, Jet Fuel: +38k mt to 787k mt, : -9k mt to 525k mt.
- A bull case for gasoline is becoming more and more difficult to make, at least for the remainder of this quarter, according to Sparta Commodities.
- CA Refiners and Traders Doing a Good Job in Procuring Foreign and Domestic Gasoline to Make up for Refining Issues in Benicia and Martinez: Kloza
- Singapore oil product stockpiles rose by 2.8m bbls w/w to 45.4m bbls as of May 21 according to Enterprise data.
- China’s state-owned refineries’ CDU capacity utilisation rates rose in the week to May 23, while rates at teapots fell, according to OilChem.
- China’s exports of refined products, namely gasoline, diesel, and jet fuel, fell 7.3% on the month to 3.18m mt in April, OilChem said citing GACC data.
- China’s LSFO production is forecast to total around 14m mt in 2025, a 7.70% rise on the year, OilChem said.
- China’s road traffic congestion in China’s 15 key cities rose by 2.2 percentage points in the seven days to May 21, BNEF said.
- India’s domestic air passenger traffic rose by 8% year-on-year to 14.3m in April but dipped 1% from March, according to the Civil Aviation Ministry, cited by Argus.
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EURGBP TECHS: Support Remains Intact
Apr-22 18:00
- RES 4: 0.8800 Round number resistance
- RES 3: 0.8781 2.236 proj of the Mar 3 - 11 - 28 price swing
- RES 2: 0.8768 High Nov 20 ‘23
- RES 1: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
- PRICE: 0.8580 @ 16:17 BST Apr 22
- SUP 1: 0.8520 20-day EMA
- SUP 2: 0.8477 61.8% retracement of the Mar 28 - Apr 11 rally
- SUP 3: 0.8442 50-day EMA
- SUP 4: 0.8415 76.4% retracement of the Mar 28 - Apr 11 rally
The latest pullback in EURGBP appears corrective - for now. The retracement has allowed a recent overbought trend condition to unwind. Support to watch lies at 0.8520, the 20-day EMA. Below this level, support at the 50-day EMA is at 0.8442. The area between these two averages represents a key support zone. For bulls, a resumption of gains would refocus attention on 0.8738, the Apr 11 high and bull trigger.
BONDS: EGBs-GILTS CASH CLOSE: OATs Underperform, UK Curve Bull Steepens
Apr-22 17:58
European FI had a constructive session in the return from a 4-day holiday Tuesday.
- Shrugging off Monday's US Treasury weakness, curves bull steepened early, continuing from Thursday's pre-holiday, post-ECB price action.
- OATs underperformed, with Bloomberg reporting that President Macron is considering calling a snap legislative election in France as soon as the autumn.
- In other developments, BOE's Greene sounded less hawkish on the rate outlook compared with her previous appearances, helping UK rate cut pricing deepen, while Eurozone flash April consumer confidence printed the weakest since November 2023.
- Yields saw a modest spike in the minutes ahead of the cash close on a Bloomberg report that US Treasury Secretary Bessent expects a de-escalation in US-China trade tensions.
- The UK curve bull steepened sharply, with Germany's bull flattening. Periphery EGB spreads were flat/slightly tighter to Bund.
- Tuesday's calendar highlight is flash April PMIs, while we also get UK public sector net borrowing data and an appearance by BOE's Pill, Bailey and Breeden.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.5bps at 1.661%, 5-Yr is down 3.7bps at 1.982%, 10-Yr is down 2.9bps at 2.443%, and 30-Yr is down 3.7bps at 2.859%.
- UK: The 2-Yr yield is down 9bps at 3.83%, 5-Yr is down 6.4bps at 3.98%, 10-Yr is down 2.1bps at 4.545%, and 30-Yr is up 2.9bps at 5.368%.
- Italian BTP spread down 0.7bps at 116.6bps / French OAT up 1bps at 77.5bps
PIPELINE: Corporate Bond Update: $5.7B to Price Tuesday
Apr-22 17:46
- Date $MM Issuer (Priced *, Launch #)
- 04/22 $2B #State Street $700M 3NC2 +73, $300M 3NC2 SOFR+95, $1B 5Y +85
- 04/22 $1.85B #Kinder Morgan $1.1B 5Y +120, $750M 10Y +150
- 04/22 $1.1B #NY Life Global $700M 3Y +60, $400M 3Y SOFR+88
- 04/22 $750M #Brookfield Asset Management 10Y +140
- 04/22 $Benchmark OCP 5Y, +10Y investor calls
- 04/22 $Benchmark Rentokil investor calls
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