OIL: Oil Summary At European Close: Crude Rises
Oil prices have risen as the market focuses on the outcome of a Putin-Trump meeting tomorrow after coming under pressure yesterday given rising US crude inventories and with the IEA forecasting a record market surplus for 2026.
- Brent OCT 25 up 1.3% at 66.48$/bbl
- WTI SEP 25 up 1.4% at 63.51$/bbl
- Prices have trended lower so far in August on excess supply concerns while the market is watching Ukraine developments closely with Presidents Trump and Putin meeting in Alaska on Friday, starting 11:30 local time.
- Trump said today that he placed the odds of failure at tomorrow’s meeting at 25%, saying also that he doesn’t think he will get an immediate ceasefire and that a second meeting will be needed to ‘divvy’ things up.
- IEA yesterday revised the 2025 global oil demand growth forecasts lower for both 2025 and 2026. Growth this year is the weakest since 2019.
- EIA showed US crude inventories for the week to Aug 8 rose by 3.04mbbl driven by a surge in imports. Refinery utilization fell more than expected to 96.4% but processing is still the seasonal highest since 2019.
- OPEC+ will have to make cuts before the end of the year to “stay credible” if warnings of a “massive surplus” are fulfilled, SEB’s chief commodities analyst Bjarne Schieldrop said in a note cited by Bloomberg.
- US shale producers are idling drilling rigs and holding back on spending as they prepare for an OPEC-induced price slump that is likely to slash US output, the FT said.
- Chinese buying of Russian Urals crude slowed this week as traders awaited the outcome of US-Russia talks on 15 August, which could influence sanctions policy.
- Bank of America reiterates a bearish outlook for H2 2025 with Brent averaging $63.50/bbl and temporary breaking below $60/bbl, according to Reuters.
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US: Thune Downplays Trump's Rescissions Package Ahead Of Senate Voting
Senate Majority Leader John Thune (R-SD) has downplayed the broader implications of President Donald Trump's USD$9.4 billion rescissions package ahead of the first Senate votes on a request that has threatened to derail government funding negotiations. The first procedural vote could take place as soon as this evening, if Thune can get a handful of wavering Republicans onside.
- Thune said on the Senate floor that the House-passed recissions package has "a focus on woke and wasteful foreign aid dollars. We're going to consider that common-sense legislation this week." Thune added: "...incredibly, Democrats are melting down at the prospect of even the most minor cuts to federal spending. You'd think we are proposing to defund the entire government from the way they are talking."
- Senate Minority Leader Chuck Schumer (D-NY) said yesterday: "This rescissions package is certainly troubling, but the pattern behind it is even worse. It sets the stage for even more party-line devastating cuts for the future, to healthcare, education, anything Republicans decide they don’t like. All on a party line vote. All because of obeisance and fear of Donald Trump."
- Schumer last week explicitly tied the package to FY26 government funding, and with the appropriations process stalled, Thune will almost certainly require Democrat votes to pass a short-term measure to offset a government shutdown in October.
- Polymarket currently shows a conservative 40% chance of a government shutdown in 2025, reflecting conventional wisdom that Democrats will not allow a shutdown despite having few other options for leverage.
US TSY OPTIONS: BLOCK: Sep'25 30Y Puts/Split
- total 22,500 USU5 108 puts, 28-29 vs. 112-09/0.16% at 1031:00ET
FRANCE: Bayrou Scraps 2x Public Holidays - As Reported Prior
As reported beforehand: "FRENCH PM: TWO DAYS OF PUBLIC HOLIDAYS WILL BE SCRAPPED AS PART OF 2026 BUDGET SAVINGS DRIVE" Reuters
Additional headlines of note:
- "FRENCH PM: WE WILL CALL ON TAXPAYERS WHO CAN MAKE A BIGGER EFFORT TO DO SO BY LIMITING CERTAIN TAX BREAKS" Reuters
10-year OAT/Bund spread remains steady at 69.5bps.
