AMERICAS OIL: WTI crude futures are set for a net gain on the week
July 11 - Americas End-of-Day Oil Summary: WTI crude futures are set for a net gain on the week with support today from signs that Trump is planning to ramp up pressure on Russia. Markets are meanwhile weighing the impact of US tariffs on demand and potential for future increase in OPEC+ output.
- IEA has revised the global oil demand growth forecasts lower for both 2025 and 2026 with the slowest growth this year since 2020, according to the July Oil Market Report.
- President Donald Trump said he planned to make a "major statement" on Russia and expects the Senate to pass a tougher Russia sanctions bill, Bloomberg said. The US has reached an agreement to send more weapons to Ukraine via NATO, he said.
- Trump announced a new 35% tariff on Canada last night, due to take effect Aug. 1, and is also eyeing blanket tariffs of 15% to 20% on most trading partners, up from the current baseline of 10%.
- OPEC+ is discussing a pause in further supply rises from October, delegates told Bloomberg. after a tentative plan to complete the revival of a 2.2mb/d supply in September.
- Russia intends in August and September to fully compensate for previously producing oil in excess of its OPEC+ quota, in line with the existing plan, Deputy PM Alexander Novak said on Friday Interfax reported.
- Saudi crude supply to China is set to rise to the highest since 2023 at 51mbbl, or 1.65mb/d, for August loading, according to Reuters.
- Crude oil options flipped to a put skew on Thursday, after futures prices slipped yesterday on OPEC+ output concerns and US trade tensions.
- The US Energy Department authorized an exchange from the SPR with ExxonMobil amid logistical challenges impacting crude oil deliveries to the Batin Rouge refinery.
- The Baker Hughes rig count was down the 11th consecutive week, down by two to 537. Oil rigs fell by one to 424, the lowest since September 2021.
- US cracks are mixed with diesel cracks higher amid gains in underlying diesel pricing, while gasoline cracks are facing pressure from a rise in underlying crude pricing as RBOB futures gains lagged those of ULSD.
- WTI Aug futures were up 2.8% at $68.45
- WTI Sep futures were up 2.5% at $67.03
- RBOB Aug futures were up 1.6% at $2.19
- ULSD Aug futures were up 2.8% at $2.45
- US gasoline crack down 0.2$/bbl at 23.39$/bbl
- US ULSD crack up 1$/bbl at 34.42$/bbl
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US DATA: Federal Deficit Running In Line With Bessent's 6.5-6.7% of GDP Est
The federal budget deficit came in a little higher than expected in May, at $316.0B (vs $314.0B consensus and as estimated by the CBO on Monday), per Treasury's monthly statement. That brought the FY2025 fiscal year (Oct-Sep) to date deficit to $1.365T, up $160B from the equivalent period in 2024 and, through the first 8 months, is set for the highest for a full FY in nominal terms since 2021.
- MNI estimates the 12-month running deficit at around 6.6% of GDP, which is squarely in the middle of Treasury Sec Bessent's estimated 6.5-6.7% of GDP that he mentioned at a congressional committee hearing today.
- Cumulative FY expenditures came in at a new record $4.85T (+7.9% Y/Y) vs revenue of $3.48T (+5.9% Y/Y). Both are set to reach all-time highs this year.
- The 12-month rolling deficit (which helps mitigate timing and other seasonal issues in the monthly comparisons) of $1.99T represents the third consecutive decline after the recent $2.15T peak in February. The 12-month running total of revenue likewise hit a new all-time high $5.11T, but expenditure continued to rise $7.11T (the all-time-high set in March 2021 at $7.62T).
- It would also represent a widening after 6.4% in FY2024 and 6.2% in FY2023.
USDJPY TECHS: Corrective Cycle
- RES 4: 150.49 High Apr 2
- RES 3: 149.28 High Apr 3
- RES 2: 147.67/148.65 High May 14 / 12 and a reversal trigger
- RES 1: 145.46/146.28 High Jun 11 / High May 29 and key resistance
- PRICE: 144.62 @ 16:32 BST Jun 11
- SUP 1: 142.12 Low May 27 and a key support
- SUP 2: 141.96 76.4% retracement of the Apr 22 - May 12 bull leg
- SUP 3: 139.89 Low Apr 22 and a bear trigger
- SUP 4: 138.82 1.50 proj of the Feb 12 - Mar 11 - 28 price swing
A short-term bull cycle in USDJPY remains in play - for now. The latest recovery is considered corrective and the trend condition is bearish. A resumption of weakness would open 142.12, the May 27 low. A clear break of this level would confirm a continuation of the bear leg and open 139.89, the Apr 22 low. MA studies remain in a clear bear-mode position too, highlighting a dominant downtrend. Key short-term resistance is 146.28, the May 29 high.
US TSYS: Extending Highs, 10s Breaching Resistance
- Treasury futures are extending late session gains, Sep'25 10Y futures breaching initial technical resistance of 110-19.5/20.5 (50-day EMA / Jun 11 High) to 110-22.5 (+16).
- Next resistance above at 111-14.5 (High Jun 5 & 61.8% of the May 1 - 22 downleg).
- Curves steeper: 2s10s +1.578 at 46.336, 5s30s +4.726 at 88.731, 10Y yld taps 4.4065% low.
- Cross-asset update: Stocks did extend lows recently, lending to a moderate risk-off theme (SPX eminis taps 6006.25 low, trades 6023.5 last -21.25), Bbg US$ index inches off low of 1206.09 to 1206.50 (-4.09).
