AMERICAS OIL: US Daily Oil Summary: WTI up 10% on Week
CRUDE: WTI has pulled back today, although has pared losses after falling to an intraday low of $74.30/b. Fears of imminent involvement in the Israel-Iran conflict appeared to ease after Trump said he would give himself up to two weeks to decide on taking military action. Nevertheless, ongoing political risks have driven WTI up nearly 10% on the week.
- WTI JUL 25 down 0.3% at 74.91$/bbl
- President Trump signalled a decision for the US to strike Iran within two weeks which leaves the door open for diplomacy and negotiations.
- US President Trump said on Wednesday that he has approved a plan but is still hoping that Tehran will agree to abandon its nuclear programme.
- A senior Iranian official said that Iran is ready to discuss limitations on its uranium enrichment but that ‘zero enrichment will undoubtedly be rejected.’
- The US issued fresh sanctions against Iran-related entities, including 2 crude tankers.
- Citibank analysts suggest Brent prices in the $75 to $78/bbl range if the war disrupts 1.1mb/d of Iranian exports but an obstruction to the Strait of Hormuz could see oil spike to $90/bbl bbl.
- PRODUCTS: Diesel cracks are easing back today after Middle East supply risks sparked a recent surge. Nevertheless, the crack is still set for gains of around 20% on the week.
- US gasoline crack up 0.7$/bbl at 22.44$/bbl
- US ULSD crack down 1.7$/bbl at 31.85$/bbl
- US refinery processing capacity rose by 40k b/d in 2024 to 18.4m b/d, according to the EIA.
- Valero is restarting the sole FCC at the 195kb/d Memphis refinery a day after a compressor tripped offline: Bloomberg.
- A tanker laden with 280k bbl of diesel travelling from the USGC to Panama U-turned in the Caribbean Sea, Bloomberg said.
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Historical bullets
US: FED Reverse Repo Operation
RRP usage rebounds to $162.082B this afternoon from $136.033B yesterday, total number of counterparties at 41. Usage had fallen to $54.772B last Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B.
EURGBP TECHS: Briefly Pierces 50-day EMA
- RES 4: 0.8768 High Nov 20 ‘23
- RES 3: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
- RES 2: 0.8541/8557 High May 2 / High Apr 28
- RES 1: 0.8456 50-day EMA
- PRICE: 0.8441 @ 16:00 BST May 21
- SUP 1: 0.8394 Low May 16
- SUP 2: 0.8359 1.236 proj of the Apr 11 - 16 - 21 price swing
- SUP 3: 0.8316 Low Mar 28 and a key support
- SUP 4: 0.8277 1.618 proj of the Apr 11 - 16 - 21 price swing
The cross rallied to show briefly above the 50-day EMA as the EUR rallied across the board into the Wednesday close. A clear break and close above would conclude the recent bearish phase and shift attention to 0.8541 resistance, the May 2 high. To the downside, the 0.8400 handle has been breached in recent weeks, an extension below which would open 0.8359, a Fibonacci projection.
BONDS: Europe Pi: OATs Flat, BTPs Long, Gilts Very Long (2/2)
- OAT: OAT remains in "flat" structural positioning, where it has been for all of May after a spell in short territory in March/April. The most recent week's trade was indicative of long setting.
- GILT: Gilt structural positioning remains "very long" into the roll, compared with "flat" where it spent most of the prior 7 months. The latest week saw some some shorts set.
- BTP: BTP remains in its typical "long" territory. Trade indicative of short covering was seen in the most recent week.
