POWER: Spain Records Warm November with Mixed Rainfall
Spain saw a warmer-than-average November, with temperatures running 0.3C above normal and rainfall close to typical levels, though conditions varied sharply, according to Miteco.
- The month ranked as the 21st warmest November since 1961, with warm conditions prevailing on the Cantabrian and Andalusian coasts, the Ebro Valley (see Map).
- The Canary Islands were also notably warm, while the Balearic Islands saw mostly normal temperatures.
- Additionally, Tenerife North Airport hit 33C on 4 November, breaking its November record by 2C; several other stations also set record high daily maximum.
- Meanwhile, November rainfall was near normal, with 92.7mm across mainland Spain, while Eastern Spain saw dry to very dry conditions (see Map).
- Meanwhile, the Balearic Islands were mostly dry, while the Canary Islands were predominantly wet, Miteco added.
Spanish hydropower reserves last week - calendar week 49 – declined sharply by 2.7 percentage points to 51.3% of capacity, falling below 2024 levels, data from the Spanish energy ministry showed.
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SOFR OPTIONS: BLOCK: Dec25 SOFR Call Spread
- 10,000 SFRZ5 96.50/96.62 call spds, 0.25 at 0630:11ET
EU-UK: BBG-UK Rejects EU Demand For EUR6.75bln To Join SAFE Procurement Program
Bloomberg News reports that the UK is set to reject a demand of up to EUR6.75bln from the European Commission to join the EU's Security Action for Europe (SAFE) military procurement program. The report claims the Commission wants EUR4-6.75bln from the UK, in addition to a EUR150-250mln administration fee to join the programme. The UK gov't said in a statement that, “We will only agree deals that provide value to the UK and UK industry. Nothing has been agreed, and we will not give a running commentary on ongoing talks.”
- UK defence contractors stand to benefit from entry into SAFE, as member states would be allowed to borrow from a EUR150bln pot backed by the EU's budget to invest in defence capabilities. At present, only components from the EU, Ukraine, or EFTA states qualify for SAFE funds, but there have been efforts to bring non-EU NATO states such as the UK, Canada and Turkey into the program.
- There is a notable split among EU members. Many Russia hawks, notably on the EU's eastern flank, advocate allowing the UK to join as soon as possible with few conditions, claiming that the UK's sizeable defence industry would facilitate a faster military buildup, crucial in the face of continued Russian hybrid attacks and aerial incursions.
- Others, led by France (which has its own large defence industry) argue that SAFE must favour EU firms to boost the Union's strategic autonomy and reduce reliance on other actors such as the US and UK.
OUTLOOK: Price Signal Summary - Bull Flag Formation In WTI
- On the commodity front, the downleg in Gold since Oct 20 appears to have been a correction and has allowed an overbought condition to unwind. Recent gains also suggest the correction is over. Price remains above a key support at the 50-day EMA, at $3890.0.0. Clearance of this EMA would signal scope for a deeper retracement. Initial resistance is at $4161.4, the Oct 22 high. A stronger recovery would refocus attention on $4381.5, the Oct 20 high and bull trigger.
- Recent weakness in WTI futures appears to be a flag formation - a bullish continuation pattern. This suggests that an upward corrective cycle remains intact for now. Price has recently traded through the 50-day EMA, at $60.84, signalling scope for a stronger recovery. Note too that resistance at $62.34, the Oct 8 high, has been pierced. A clear move through it would expose key resistance at $65.77, the Sep 26 high. The bear trigger is $55.96, the Oct 20 low.
