AMERICAS OIL: WTI crude is up, heading for another weekly gain
WTI crude is up, heading for another weekly gain ahead of Donald Trump’s inauguration Monday as US sanctions impact global supply, redirecting flows and increasing shipping rates. Potential US interest rate cuts this year could boost demand though uncertainty remains around Chinese oil demand growth.
• Chinese economic data out Friday showed higher-than-expected economic growth for Q4, but oil refinery throughput fell 1.6% in 2024 amid soft demand and weak margins. China’s apparent oil demand fell 2.2% to 13.93mbpd in Dec, Bloomberg showed.
• The incoming Trump administration is expected to take a tough stance on Iran and Venezuela and potentially introduce tariffs which could impact US imports of Canadian oil.
• Incoming nominee for Treasury secretary Scott Bessent said he would support the increased sanctions against Russia in a bid to ends the Ukraine conflict.
• The potential ceasefire in Gaza faces a vote in the Israeli parliament though key ministers have yet to approve the deal though it is supposed to take effect Sunday. The ceasefire could halt Houthi attacks on the Red Sea.
• Colonial Pipeline estimates Line 1 will reopen Friday. Motiva told shippers that fuel shipments were resuming with a partial delivery of fuel made to Macon, Georgia and deliveries expected in Atlanta Saturday.
• LyondellBasell’s 246kbpd Houston, Texas, refinery will begin hsutting units from Jan 20, according the Bloomberg sources.
- WTI FEB 25 up 0.1% at 78.73$/bbl
- WTI MAR 25 up 0.0% at 77.83/bbl
- US gasoline crack up 0.1$/bbl at 10.35$/bbl
- US ULSD crack down 0.7$/bbl at 30.95$/bbl
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Historical bullets
OUTLOOK: Price Signal Summary - Impulsive Bear Wave In Gilts Extends
- In the FI space, the current bearish cycle in Bund futures remains in play and the contract continues to trade closer to its recent lows. Sights are on 133.98, 61.8% retracement of the Nov 6 - Dec 2 bull cycle. Clearance of this level would strengthen the current downleg. For bulls, a reversal higher would highlight the end of the correction. First key resistance to watch is 136.01, the Dec 12 high. A move above this level would expose 137.18, the Dec 2 high.
- A strong bearish theme in Gilt futures remains in play and this week’s extension reinforces current conditions. The move down has resulted in a breach of key short-term support at 93.40, the Nov 18 low. The break of this level highlights a stronger reversal. Sights are on 72.63, 3.382 projection of the Dec 3 - 4 - 5 minor price swing. Initial resistance is at 93.64, the Dec 16 high and a gap low on the daily chart.
USD: USDJPY edges to session high
- USDJPY is edging towards the intraday high, the move is small and gradual, and taking its cue from the selling interest going through In Bonds.
- US Tnotes hovers at session low, as Desks await the FOMC later and look for less cuts in 2025 as Trump takes over.
- Resistance in the USDJPY is further out, past the 154.00 figure, at 154.48 High Dec 16.
US DATA: Mortgage Applications Tread Water
- MBA composite mortgage applications dipped -0.7% last week (sa) after increasing 5.4% the prior week.
- Refis pulled back a touch with -2.6% having surged 27% the week prior.
- New purchase applications meanwhile edged 1.4% higher after -4.1%, with the previous increase dissipating after what appeared to be a lagged response to lower mortgage rates heading into the fall.
- New purchase applications are at 61% of 2019 levels vs 36% for refis.
- The 30Y conforming mortgage rate increased 8bps to 6.75%. It has averaged 6.70% in the last three weeks, which compares to a recent high of 6.9% in early Nov and September lows of around 6.15%.
