AMERICAS OIL: WTI crude is under increased pressure after weak US economic data
August 1 - Americas End-of-Day Oil Summary: WTI crude is under increased pressure after a series of weak US data releases today, adding to global economic concerns amid President Trump’s tariffs. Crude remains set for a net weekly rise overall due to Trump’s threats of secondary tariffs on Russia, though has reversed most of the gains seen earlier in the week.
- Nonfarm payrolls growth was weaker than expected at 73k (cons 104k) after huge downward revisions in both June (-133k to just 14k) and May (-125k to 19k).
- Manufacturing data also underperformed estimates, with the US ISM Manufacturing Index at a nine-month low of 48, compared to an estimated 49.5, in a recent release.
- US President Trump slapped steep tariffs on exports from dozens of trading partners, pressing ahead with his plans to reorder the global economy ahead of a Friday trade deal deadline, Reuters reports.
- Any perceived disruption to Russian volumes could propel Brent prices into the $80s or higher, according to JP Morgan.
- OPEC+ holders of spare production capacity will be reluctant to boost their own output to help facilitate US sanctions aimed at co-chair Russia, RBC analysts said in a note cited by Bloomberg.
- At least four oil tankers laden with Russian crude are waiting off India’s western coast, Bloomberg reports.
- Discounts on Russia’s Urals crude narrowed by around 60-80 cents/b on the month is July, according to Interfax citing Argus data.
- OPEC+ will likely approve another oil output hike on Sunday, sources familiar with the discussions told Reuters, adding that the group is still debating the final size of the increase for September.
- Asian refiners are raising US WTI crude imports for Q4 as Middle East grade prices such as Murban rise, according to Sparta Commodities.
- The 105k b/d Paulsboro refinery in New Jersey has no plans to restart idled units despite a drop in European refined products imports to the East Coast, according to CEO Matt Lucey cited by Dow Jones.
- Valero’s 205k b/d Houston, Texas refinery reports maintenance activities might require the use of safety flare system per a community alert.
- US Baker Hughes rig count down 2 to 540 w/w, oil rig count down 5 w/w to 410. The Canadian rig count fell 5 to 177. Canadian oil rigs were down 4 to 124, down 26 y/y.
- US cracks are lower, with product price declines outpacing crude’s fall amid economic concerns. Diesel cracks are under particular pressure, falling to their lowest since late-June.
- WTI Sep futures were down 2.8% at $67.33
- WTI Oct futures were down 2.9% at $66.18
- RBOB Sep futures were down 2.6% at $2.12
- ULSD Sep futures were down 4.1% at $2.30
- US gasoline crack down 0.3$/bbl at 21.64$/bbl
- US ULSD crack down 2$/bbl at 29.23/bbl
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDJPY TECHS: Bearish Cycle
- RES 4: 149.28 High Apr 3
- RES 3: 148.65 High May 12 and a reversal trigger
- RES 2: 146.19/148.03 High Jun 24 / 23
- RES 1: 144.97 50-day EMA
- PRICE: 143.87 @ 16:22 BST Jul 2
- SUP 1: 142.68 Low Jul 1
- SUP 2: 142.12 Low May 27 and a key short-term support
- SUP 3: 141.96 76.4% retracement of the Apr 22 - May 12 upleg
- SUP 4: 141.49 Low Apr 23
A bear threat in USDJPY remains intact and Tuesday’s sell-off reinforces this theme. The Jun 23 shooting star candle formation highlighted a reversal of the recent recovery and this signal remains in play. Note too that price has traded through the 20- and 50-day EMAs. A clear break of the EMAs strengthens a bearish threat and opens 142.12, the May 27 low and a key short-term support. Initial resistance is at 144.97, the 50-day EMA.
US: Partisan Split Widens On Market Volitility Expectations In 2025 - Gallup
A new survey from Gallup has found that, “Most investors foresee volatility persisting through 2025 and believe the worst is still to come, rather than “behind us.” Despite this, investor confidence in the stock market as a means of building retirement wealth remains high.”
- Gallup notes: “Democratic investors (48%) are far more likely than Republican investors (9%) to say they are very concerned about recent stock market volatility and are twice as likely to be very or somewhat concerned overall (82% vs. 41%). Concern among independents falls between the two partisan groups, similar to the national average.”
Figure 1: "In terms of market volatility this year, do you think the worst is behind us or the worst is ahead of us?"
Source: Gallup
US OUTLOOK/OPINION: Specific Private Industries Worth Watching In NFP Report
- Within industries of nonfarm payrolls, expect a continued focus on those more cyclically sensitive sectors, such as food & drinking places, for discretionary spending indicators.
- This category saw notable strength in May at +30k after +23k in April (average +11k in 2024) but maybe scope for a downward revision.
- Friday saw real consumer spending disappoint in May at -0.3% M/M (cons 0.0) with particular weakness admittedly in goods (-0.8%) but services also languished with -0.03% M/M for technically a third monthly contraction in the five months of the year to date.
- There could also be a calendar effect at play, with BofA warning that the earlier Memorial Day could weigh on leisure & hospitality more broadly.
- Transportation & warehousing should also be watched for a look at more direct impacts from US tariff policy. Recall that this category saw large downward revisions last month, leaving payrolls growth of +6k in May after -8k in April (initially +29k) and -21k in March (+3k) and changing a narrative around implications of inventory accumulation on warehousing roles in particular.
- The latest vintage points to a recent net negative impact from tariffs now having peaked with 28k and 34k monthly increases back in Nov and Dec.
- Education & health services will also be watched closely after today's ADP employment report showed a yet further widening in what has been a puzzling disconnect with BLS payrolls.
