OIL: US Permian Crudes Turning Lighter: Reuters
WTI is turning lighter, which could make it less appealing for some refiners, according to Reuters.
- Recent testing shows that the oil’s gravity is between 41-44 degrees, compared to the traditional 38-42 for WTI.
- WTI’s API is rising as producers move into second-tier acreage which yields more natural gas.
- Lighter crudes tend to produce higher volumes of naphtha and less diesel and jet fuel.
- Refineries are also configured to run on specific APIs, so a rise for WTI means that super-light crudes would have to be blended with heavier grades for processing into gasoline, diesel, and jet fuel.
- Pipeline companies could look to blend crude with grades such as West Texas Sour to meet export specifications.
- Less supply of heavy crude and high prices cut demand for WTI Midland.
- This could result in lower prices for the Dated Brent benchmark of which WTI is an integral part.
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US TSYS: Fed Gov Waller Buoys Rates, Inflation Undershoot Concers
- Treasuries looked t finish near session highs Friday, bouncing off late morning lows following dovish comments from Fed Gov Waller on CNBC, consistent with the Fed going 50bp at the next meeting in November.
- Gov Waller expressed concern with inflation undershooting, not overshooting, noting firms' limited pricing power and wage inflation coming down, and that inflation is potentially on a lower path that had previously been expected.
- Fed Governor Bowman (voter) has issued a statement explaining why she dissented against the FOMC’s decision to cut the Fed Funds target range by 50bps on Wednesday. Her comments are in firm contrast to Governor Waller’s recent CNBC interview which on the flip side seemed concerned with risks of inflation undershooting.
- Projected rate cuts into early 2025 bounced off early session lows, latest vs. late Thursday levels (*) as follows: Nov'24 cumulative -37.8bp (-35.9bp), Dec'24 -75.0bp (-72.4bp), Jan'25 -108.5bp (-106.5bp).
- Dec'24 10Y Tsy futures are currently +4 at 114-27.5 vs. 114-17 low, still well off initial technical resistance at 115-23.5 (High Sep 11 and the bull trigger). Curves bull steepened, 2s10s +2.480 at 15.242, 5s30s +2.052 at 58.677.
- Looking ahead to Monday brings more Fed speak from Bostic, Goolsbee and Kashkari, data includes flash PMI data from S&P Global.
US: Harris To Deliver Remarks In Atlanta Shortly
Vice President Kamala Harris is shortly due to appear at an event in Atlanta, Georgia to highlight the state’s abortion ban. The event will be Harris’ first speech since she ascended to the top of the Democratic ticket focused primarily on abortion rights. LIVESTREAM
- AP notes: “About half of voters say abortion is one of the most important issues as they consider their vote – but it’s more important to women who are registered voters than to male voters, according to a new AP-NORC poll. About 6 in 10 women voters say abortion policy is one of the most important issues to their vote in the upcoming election, compared to about 4 in 10 male voters.”
JGB TECHS: (Z4) Bullish Theme
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 145.95/146.67 - High Aug 6 / High Mar 6
- PRICE: 144.79 @ 18:58 BST Sep 20
- SUP 1: 143.57 - Jul 17 high
- SUP 2: 142.23 - Low Jul 02
- SUP 3: 140.21 - 1.236 proj of Mar 22 - Nov 1 ‘23 - Jan 15 price swing
A bullish outlook for JGB futures remains intact. Strong impulsive gains in early August reinforce this theme and the pullback between Aug 6 - Sep 3, appears to have been a correction. Moving average studies on the continuation chart are in a bull-mode position, highlighting a clear uptrend. A continuation higher would open 145.95, the Aug 6 high and a bull trigger. A reversal lower would instead expose 143.57, the Jul 17 high.
