OIL: Trump Announces Venezuelan Oil Flows To US Driving Prices Down Sharply
US President Trump has announced on Truth Social that Venezuela will ship “between 30 and 50 MILLION barrels of High Quality Sanctioned Oil” to the US. No time frame has been given but earlier reports said that Chevron, who still has operations there, has sent 11 tankers to the country to begin transporting oil to the US. Gulf refineries are geared to refine heavy, sour crude of the type that Venezuela produces. WTI has reacted sharply to the news falling 1.7% to $56.16/bbl after declining on Tuesday as additional global supplies add to a record surplus.
- Without a timeframe it is difficult to understand how Venezuela will be able to send that much oil to the US. The IEA reported that it produced only 860 kbd in November last year down from around 1mbd early in 2025.
- In the 1990s, Venezuela produced over 3mbd. According to the IEA it was the 17th largest oil exporter globally and second in South America in 2023 as sanctions, corruption and a related-lack of investment in the sector drove output down 73% since 2000.
- Given sanctions Venezuela has sold its crude at a discount to benchmarks which drove demand from China, the largest customer. It should receive more for its crude now as Trump also said that the US would buy it at market prices but with the benefit going not just to Venezuela’s people but also those of the US.
- Energy Secretary Wright will “execute the plan” and Chevron, Conocophillips and Exxon are due to meet at the White House on Friday according to the ABC.
- The US has also asked Venezuela to sever ties with Iran, Russia and China.
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JAPAN: Nikkei(NHH6) - Japanese Data Sees Push Above 50800 Fail
The Nikkei(NHH6) contract Friday night range was 50460 - 50880, Asia is currently trading 50730, +0.05%. The (NHH6) contract consolidated its gains to end the week on Friday. The Nikkei 225 technically remains in an uptrend while the support toward 48000 holds, albeit a very steep one. In the Asian session price data has seen price stall and fall back below the 50800 area, failure to push above here and we could see a pullback towards first support around 49600-900.
- "JAPAN 3Q GDP -2.3% ON ANNUALIZED BASIS; EST. -2.0%(Q3 P -1.8%), JAPAN GDP DEFLATOR AT 3.4% IN 3Q Y/Y; EST. 2.8%" - BBG
- MNI BRIEF: Japan's Oct Negative Real Wages Narrow. Inflation-adjusted real wages, a barometer of households’ purchasing power, remained in negative territory for the 10th straight month in October, falling 0.7% after a 1.3% drop in September, preliminary data from the Ministry of Health, Labour and Welfare showed Monday.
- The Nikkei 225 Index Average True Range(ATR) for the last 10 Trading days: 802 Points
Fig 1: Nikkei 225 Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUSSIE BONDS: ACGB Jun-54 Auction Prints Below Mids With Stronger Demand
Today’s auction result extended the recent trend of firm pricing for ACGBs, with the weighted average yield printing 0.81bps through prevailing mids, according to Yieldbroker. Moreover, demand strengthened, as reflected by a cover ratio of 3.4333x, up from 2.8500x from the previous auction.
- The stronger demand came with the outright yield at a fresh cycle high, 20bps higher than the previous auction.
- A flatter 10s/30s yield curve versus the previous outing didn’t appear to be a negative technical factor.
- The recent improvement in sentiment toward longer-dated global bonds may have assisted demand.
- In the wake of the auction, the ACGB Jun-54 has traded ~1bps richer in the secondary market.
US STOCKS: S&P(ESZ5) - Has A Look Toward 6900 Before Backing Off
The S&P(ESZ5) Friday night range was 6856.75 - 6905.00, SPX closed +0.19%, Asia is currently trading around 6882. Risk continued its slow grind higher on Friday night. The Bulls will be liking this price action as the market consolidates above 6800 before potentially having another run higher into year-end. I remain wary of getting bullish up here, but it's tough to argue with the price action. This morning the futures opened a little higher, E-minis(S&P) +0.05%, NQZ5 +0.05%. On the day support should again be back toward the 6790-6820 area as the market looks to potentially challenge above 6900 again at some point en route to new highs. Only a break back below 6700-6750 would signal a potential pullback.
- The FOMC will be important this week with the market pricing in rate cuts, how many dissenters are needed to put a dent in this bullish view ?
- Oracle is also releasing results 10/12 and will be watched by those looking for reassurance on the AI sector.
- The S&P 500 Index Average True Range(ATR) for the last 10 Trading days: 68 Points
Fig 1: S&P 500 Index Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
