OIL: Oil Tight Ranges in Near Term, Pending Further News from US Iran Talks
Feb-12 05:01
- Oil's steady ascent continued in Asia today with WTI up +0.5%, nearing $65. WTI has traded in a $64.78 - $65.10 range, currently at US$64.97bbl. WTI is at the mid point of its upper resistance via the 50-day EMA of $67.90 and downside via the 100-day EMA at 61.28. Momentum indicators are weak, leaving oil susceptible to US Iran headlines. This suggests prices are likely to stay rangebound in the near term as political progress remains slow.
- Brent is up +0.4% at US$69.70bbl - having traded in a very tight range of $69.54 - 69.85.
- Oil markets continue to wait for further new on the next US Iran meeting whilst digesting the myriad of news out on stockpiles and potential new oil sources.
- Chevron, Eni , QatarEnergy, Repsol won rights to explore for oil in Libya, the latest sign that the nation that holds Africa's largest crude reserves is opening up for investments following years of civil war. (per BBG)
The well known longer term oversupply issue is not a key driver in the short term as uncertainty remains as to any outcome of US Iran talks. The bar is high for a clear outcome with both sides stoic in their views as to their preferred outcome.
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AUSSIE BONDS: Subdued Data-Light Session, Oct-36 Supply Tomorrow
Jan-13 04:54
ACGBs (YM -1.0 & XM -0.5) are slightly weaker after relatively subdued data-light session.
- Cash US tsys are slightly cheaper in today's Asia-Pac session after yesterday's modest sell-off.
- Cash ACGBs are 1bp richer with the AU-US 10-year yield differential at +53bps. A simple regression of the 10-year yield differential against the AU–US 1-year forward 3-month (1Y3M) swap spread over the past two years suggests the current spread sits close to its regression-implied fair value.
- Today’s auction of the Jun-54 bond result extended the recent trend of firm pricing for ACGBs, with the weighted average yield printing 0.27bps through prevailing mids, according to Yieldbroker. However, demand weakened, as reflected by a cover ratio of 2.3433x, down from 3.4333x from the previous auction.
- The bills strip is flat to -2 across contracts.
- RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 31% for February to 94% by June and 141% by December 2026.
- Tomorrow, the local calendar will see Job Vacancies.
- The AOFM plans to sell A$1bn 4.25% 2036 bond tomorrow and A$700mn 3.25% 2029 bond on Friday.
COMMODITIES: WTI Fails Key Test as Markets Wait for Further Iran News
Jan-13 04:43
- Oil prices moderated Tuesday during the Asian trading day following on from three days of strong gains.
- WTI is lower by -0.24% at US$59.74 bbl, having failed in its test of $60 mid-morning. The 100-day EMA is above as the topside resistance at $60.13.
- Brent is down by -0.30% at US$64.08 bbl, after a mid morning high of $64.38.
- Protests in Iran have seen 648 people killed, a human rights group said on Monday. Human rights groups are warning an internet blackout that has lasted more than three-and-a-half days, is aimed at masking the extent of the bloodshed. This as the Iranian Foreign Minister Araghchi said that security forces have regained full control of the the country, with President Trump indicating that the US is weighing various options.
- "Effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America," President Trump posts on Truth Social. (per BBG)
- Two of the world's largest oil traders are planning to move Venezuelan oil into storage in the Caribbean as a precursor to starting exports again, with BBG reporting that they are offering VZN oil to fuel makers in Texas and Louisiana already.
- BBG reported today that a research note from Goldman Sachs predict oil prices to bottom in Q4 this year with WTI reaching $52 bbl and Brent US$56 bbl.
FOREX: USD - BBDXY Treads Water Within A 1205-1215 Range
Jan-13 04:38
The BBDXY has had a range today of 1209.24 - 1210.61 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD found some support around the 1208 area after the initial knee-jerk lower yesterday. This leaves the USD in the middle of its recent range without any clear direction. On the day, it looks like 1205-1215 should cover it for now, watch for any ruling from the Supreme court as well as a potential incursion into Iran to maybe shake it up a little. This lack of a trend is being reflected in the CFTC data which shows very little positioning in the USD Index to start the year.
- EUR/USD - Asian range 1.1657-1.1671, Asia is currently trading {EURUSD Curncy}. We are firmly back in the wider 1.1450-1.1850 range which dominated the last 6 months of the year and we need a catalyst to get a break and some sort of a trend going again. On the day it looks likely we tread water within a narrower 1.1615-1.1715 range as the market looks for a trigger to regain some momentum.
- GBP/USD - Asian range 1.3462-1.3479, Asia is currently dealing around {GBPUSD Curncy}. The pair had the look of potentially topping out above 1.3500 but it will need to cap this move toward the 1.3500 area. On the day, I am looking for sellers to be around back toward 1.3500 again, the bears need a break back below 1.3350/80 to signal a correction lower might be on the cards.
- Cross asset : SPX -0.15%, Gold $4595, US 10-Year 4.18%, BBDXY 1210, Crude Oil $59.75
- Data/Events : France Budget Balance YTD
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
