AMERICAS OIL: WTI crude markets continued to lose ground
August 5 - Americas End-of-Day Oil Summary: WTI crude markets continued to lose ground following news Russia is considering a Ukraine air-truce offer to Trump in order to avoid secondary US tariffs. Also, market oversupply concerns persist as economic fears and another widely expected OPEC+ output hike have added pressure, offsetting risk of Russian supply disruption.
- Oil is finding some support from the threat of secondary tariffs on Russia if a ceasefire with Ukraine is not agreed before the August 8 deadline. US President Trump said special envoy Steve Witkoff will go to Russia this week.
- Trump made comments that low energy prices would pressure Putin to stop the war in Ukraine, seemingly clashing with his pressure on India to cease purchases of Russian oil or face higher tariffs.
- Trump said on Truth social that he will “be substantially raising the Tariff paid by India to the USA” due to Indian ‘buying and then selling on Russian oil’.
- China is also a major importer of Russian crude but has not yet been named specifically.
- Russia’s oil shipments are currently showing no clear signs of being hit by President Trump’s threat to “substantially” hike tariffs on imports from India, the biggest buyers of Moscow’s seaborne crude, Bloomberg reports.
- China’s imports of Iranian crude fell to 1.2m b/d in July from 1.7m b/d in June, according to Kpler data cited by Bloomberg.
- Iran’s crude exports in July remained broadly in line with elevated levels sustained since late 2023 with limited immediate impact despite expanded US sanctions, Vortexa said.
- Middle East crude benchmark spot premiums fell to a one-month low Aug. 5, driven by OPEC+’s decision to hike production further in September.
- Crude backwardation has been softening in line with the pull back in front month futures as a global excess supply is widely expected with OPEC ramping up production and assuming uninterrupted Russian oil shipments.
- US crude oil inventories are expected to have fallen by 1.8m bbl in the week to Aug 1, according to a Reuters preliminary survey. Distillates were seen up 1.1m bbl and gasoline was seen down 1.1m bbl. Refinery runs were seen down 0.2%.
- US cracks are mixed with diesel cracks falling ahead of API data later today, expected to show a build in stocks. Gasoline cracks are seeing some support, with a draw expected in today’s data release. Tomorrow’s EIA data are expected to show the same.
- WTI Sep futures were down 1.7% at $65.16
- WTI Oct futures were down 1.7% at $64.19
- RBOB Sep futures were down 0.6% at $2.09
- ULSD Sep futures were down 3% at $2.25
- US gasoline crack up 0.6$/bbl at 22.67$/bbl
- US ULSD crack down 1.7$/bbl at 29.29/bbl
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Historical bullets
USDCAD TECHS: Trend Outlook Remains Bearish
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.3674/3776 20- and 50-day EMA values
- PRICE: 1.3607 @ 16:12 BST Jul 4
- SUP 1: 1.3557 Low Jul 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
The trend needle in USDCAD points south and this week’s move down reinforces current conditions. S/T gains between Jun 16 - 23 appear to have been corrective. Key support and the bear trigger is 1.3540, Jun 16 low. Clearance of this level would resume the downtrend and open 1.3503, a Fibonacci projection. Pivot resistance is at the 50-day EMA, at 1.3776. A clear break of this average would signal scope for a stronger recovery.
AUDUSD TECHS: Bull Cycle Remains In Play
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6590 High Jul 01
- PRICE: 0.6548 @ 16:05 BST Jul 04
- SUP 1: 0.6521 20-day EMA
- SUP 2: 0.6468/6373 50-day EMA / Low Jun 23 and a reversal trigger
- SUP 3: 0.6357 Low May 12
- SUP 4: 0.6275 Low Apr 14
The trend set-up in AUDUSD remains bullish and the pair is holding on to its recent gains. The latest break higher maintains the bullish price sequence of higher highs and higher lows, the definition of an uptrend. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 0.6603 next, the Nov 11 2024 high. Key short-term support has been defined at 0.6373, the Jun 23 low.
EURJPY TECHS: Northbound
- RES 4: 171.88 High Jul 19 ‘24
- RES 3: 171.28 1.382 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 2: 171.09 High Jul 23 ‘24
- RES 1: 170.61 High Jul 03
- PRICE: 170.22 @ 16:04 BST Jul 04
- SUP 1: 169.04 Low Jul 02
- SUP 2: 167.87 20-day EMA
- SUP 3: 167.13 Low Jun 20
- SUP 4: 165.66 50-day EMA
EURJPY traded higher on Thursday resulting in a print above 170.47, the 76.4% retracement of the Jul 11 - Aug 5 sell-off. A clear break of this price point would strengthen bullish conditions and signal scope for extension. This would open 170.28 next, a Fibonacci projection. The trend is overbought, a pullback would unwind this condition. Support to watch lies at 167.87, the 20-day EMA.
