OIL: Oil Summary at European Close: Crude Falls Back
Dec-06 16:14
Crude futures are softer on the day and on the week, as OPEC+ still plans to bring back supplies to the market, albeit delayed as expected. Concerns that supply will still outstrip demand weighed on prices further. A stronger USD is also adding pressure.
- Brent FEB 25 down 1.3% at 71.18$/bbl
- WTI JAN 25 down 1.4% at 67.33$/bbl
- Russian oil flows via the Druzhba pipeline to the Czech Republic resumed on Friday.
- Kazakhstan plans to ship 130,000 mt of oil to Germany in December, Kazakh pipeline operator Kaztransoil said.
- OPEC+ is following a long-term strategy amid a shrinking market share and shifting supply dynamics, according to Kpler.
- OPEC’s delay decision on Thursday reflected supply/demand fundamentals and a lack of commitments by certain members Saudi Energy Minister Abdulaziz bin Salman said to CNBC in an interview on Friday.
- The global oil market faces a heavy surplus in 2025 with an oversupply of more than 1mb/d, according to Macquarie Group cited by Bloomberg.
- Global crude balances are expected at a 300kb/d surplus in 2025 compared with 700kb/d previously forecast, according to Morgan Stanley. The change is due to the OPEC+ output revival delay, improving compliance and marginally lower Iranian production.
- HSBC said that the oil market surplus in 2025 is reduced to just 0.2 mbd on its estimates if OPEC+ goes ahead with its output hikes in April as announced at Thursday's meeting.
- Further OPEC+ delays could be ahead as an increasing oil surpluses could push Brent to average $65/bbl, without expecting a net increase in OPEC+ production in 2025, Bank of America said.
- OPEC+’s production agreement won’t reverse a downward trend in oil prices over the next few years due to structurally weak demand, Capital Economics said.
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FED: JPMorgan Sees Slower Pace Of Cuts Post-Election
Nov-06 16:13
JPMorgan's new rates call post-elections - 25bp cuts in Nov and Dec as before, but only 100bp of cuts in 2025 (quarterly) vs the 150bp they had previously expected over the year (per their latest submission to the BBG survey):
- "the various policy uncertainties may lead the Fed to move more slowly than it otherwise would. After December we now see the Fed easing at a quarterly pace, with the next ease in March and continuing until the funds rate reaches 3.5%....Trump’s ability to reshape the Fed will likely only be realized slowly over time...the two most immediate issues now are how assertively Trump pushes forward with his campaign pledges on immigration and trade...fiscal policy is more of a calendar year 2026 issue."
US STOCKS: Equities Roundup: Banks, Energy Servicers Lead Stocks to New Highs
Nov-06 16:01
- Stocks trade broadly higher after midmorning, just off new all-time highs marked in the aftermath of Tuesday's election. Trump presidency seen as positive for business, credit risks waning. Wires report Vice President Kamala Harris will make concession announcement late this evening. Currently, the DJIA trades up 1279.68 points (3.03%) at 43498.39, S&P E-Minis up 104.75 points (1.8%) at 5916.75, Nasdaq up 378.3 points (2.1%) at 18818.05.
- Financials and Energy sectors led gainers in the first half, banks and financial services outperforming: Discover +18.22%, Synchrony +17.11%, Capital One +13.44%. Meanwhile, Goldman Sachs gains 12.05%, Wells Fargo +11.03%, Morgan Stanley +9.58% and JP Morgan +9.31%. Oil & gas services shares supported the Energy sector in the first half: Baker Hughes +7.34%, EQT Corp +6.79%, Kinder Morgan +6.31% while Halliburton gains 5.89%.
- Real Estate and Utility sectors lagged the post-election rally: investment trusts, particularly specialized and industrial REITS underperformed: American Tower -6.93%. Iron Mountain -6.49%, Public Storage -5.53%. Electricity providers weighed on the Utility sector: AES -9.8%, NextEra -6.64%, American Electric -3.84%.
- With over 75% of of the S&P reporting earnings already, a large backlog of earnings announcements expected after today's close include: Corteva, Albemarle, Energy Transfer, Take-Two Interactive Software, Duolingo, Gilead Sciences, APA Corp, McKesson Corp, Williams Cos, Dutch Bros, Match Group, Lyft, Core Scientific, Permian Resources, Zillow Group, Guardant Health, Fair Isaac, QUALCOMM, AMC Entertainment, Coherent, Wolfspeed.
SEK: Weakens Alongside EUR On Tariff Threat, Riksbank Decision Tomorrow
Nov-06 15:58
SEK has weakened alongside the EUR today, with European equities extending lower and US tariff-related growth concerns increasing expectations for more aggressive monetary easing.
- USDSEK pierced the July 30 high at 10.8843 overnight, but has since moved away from session highs. Initial resistance is seen around 11.0000 and 11.0079, the latter corresponding to trendline resistance drawn from the September 2022 high.
- A similar trendline (also drawn from the Sep 2022 high) has already been breached in AUDSEK today, where 7.1984 (May 9 high) is the next topside target.
- SEK may be more exposed to US trade policy changes than NOK (with the oil/gas sector providing some insulation in Norway), helping NOKSEK rise 0.5% intraday, targeting the August 16 high at 0.9842.
- A 50bp cut at tomorrow’s Riksbank decision is widely expected. Market focus will be on whether the policy statement keeps the door open to another 50bp cut in December, and to what extent the implications of the US election result is discussed.
- MNI’s Riksbank preview is here.
- Note that Swedish October flash inflation is due tomorrow at 0700GMT/0800CET. Analysts expect CPIF ex-energy at 2.0% Y/Y, above the Riksbank’s 1.8% September MPR projection. However, this will be too late to impact tomorrow’s rate decision.
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