AMERICAS OIL: WTI Crude Oil is higher after headlines on Russian sanctions
Mar-31 18:39
March 31 - Americas End-of-Day Oil Summary: WTI Crude Oil is higher after headlines that European nations are considering further sanctions on Russia, raising supply risks. The market was already weighing prospects of reduced Russian and Iranian supply after US President Trump’s threat to impose primary and secondary tariffs on the two nations’ oil.
- Trump is proposing “secondary” tariffs on those who buy oil from Russia and Iran, which would have a significant effect on China. This follows an order to charge importers of Venezuelan oil and gas a 25% “secondary” tariff from April 2, whether it comes indirectly or directly.
- However, Trump implied that measures against Russia weren’t imminent. Trump and Putin are due to speak later this week.
- OPEC+ are still set to raise output from April, but members remain under pressure to comply with targets. The group will likely continue to raise oil output in May, Reuters said. The JMMC monitoring committee are due to meet on April 5.
- The US has revoked further licenses to operate in Venezuela, as Trump increases pressure on Venezuelan oil exports, including those for Repsol, M&P and Eni.
- Oil will likely fall to the low $60s/bbl as markets remain oversupplied, according to Macquarie Group cited by Bloomberg.
- The crude market is set to tighten after a temporary surplus peaking at 1.5m b/d in April, according to Kpler.
- Current strength in Canadian heavy sours may not persist, but the price also doesn’t look set for a big hit if President Trump makes good on his pledge to raise tariffs on Canadian energy, OPIS said citing BMI Economics.
- The NOAA 6–14-day outlook is neutral for heating demand but supportive of cooling demand in the West through Apr 13 with below-normal conditions in the Southwest and Midwest, shifting east late in the outlook period, with normal to above normal conditions elsewhere. Below-normal heating demand is likely in most of the country with above-normal demand in the northern part of PADD 2.
- US cracks were lower amid signs of weakening distillate demand heading into shoulder season while gasoline cracks reverse some of last week’s post-EIA gains.
- WTI May futures were up 3.1% at $71.48
- WTI June futures were up 3.0% at $70.99
- RBOB Apr futures were up 2.2% at $2.28
- ULSD Apr futures were up 2.3% at $2.31
- US gasoline crack down 0.1$/bbl at 24.71$/bbl
- US ULSD crack down 0.1$/bbl at 24.26$/bbl
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US OUTLOOK/OPINION: A Stacked Week Ahead For US Macro
Feb-28 21:45
- Next week sees a series a key risk points, starting with trade policy and Trump’s Mar 4 deadline for an additional 10% tariffs on China (for 20% total) and the imposition of the delayed 25% tariffs on Canada and Mexico. US Treasury Sec Bessent offered a potential offramp here, saying Friday afternoon the US wants to see Canada and Mexico match tariffs on China. Whilst following through with that could see temporary de-escalation in US trade tensions with Canada and Mexico, it would likely stoke greater likelihood of China retaliation and/or further fiscal support.
- It’s bookended by ISM manufacturing (Mon) and services (Wed) reports, watched to see whether sharp increases in manufacturing prices paid seen in other surveys first show up in this broader measure and whether there is sign of spillover to services.
- The main data release of the week comes on Friday though, with the nonfarm payrolls report for February.
- The January report saw a modest miss for nonfarm payrolls but it was more than offset by a robust two-month net revision along with a smaller than expected benchmark revision. Further, the unemployment rate again surprised lower at 4.0% for its lowest since May 2024 in a further step away from the 4.3% the median FOMC member forecast for 4Q25 in the December SEP.
- Early days for the Bloomberg survey see nonfarm payrolls growth at a seasonally adjusted 155k in February and for the unemployment rate to hold at that lower 4.0%.
- Note that the nature of the DOGE “deferred resignation program”, with some 77k federal employees accepting the offer, shouldn’t see any direct impact on payrolls growth (in the establishment survey) until the October report as workers will remain on the payroll in the interim. One area where the direct impact could show however is the household survey. Assuming those who accepted the offer are treated as equivalent to a furloughed worker, they’ll register as unemployed. A word of caution though, it’s a much more volatile survey, with a 90% confidence level of +-600k for employment vs +-136k for payrolls.
- Note that post-payrolls Fedspeak sees a notable addition this time, with Fed Chair Powell set to talk on the economic outlook with both text and Q&A, starting at 1230ET. Data and tariff deliberations should still set the tone, but at this juncture we wouldn’t be surprised to see a continued call for patience in rate cut expectations considering dovish repricing seen over the past week. This is a theme that could be seen from other notable Fedspeakers throughout the week, including permanent voters Williams, Waller and Kugler.
STIR: Significant Dovish Repricing In US Rates This Week
Feb-28 21:14
- The softer growth outlook has dominated signs of renewed inflationary pressures this week - see a key summary of the week's macro developments in the MNI US Macro Weekly here.
- Fed Funds futures have a next 25bp Fed cut now fully priced for June and over the week have added nearly an entire 25bp cut over 2025 with a cumulative 70bp of cuts vs the 50bp implied by the median FOMC dot in Dec.
Significant dovish adjustment over the week:
MACRO ANALYSIS: MNI US Macro Weekly: No Escaping Tariff Distortions
Feb-28 21:12
- We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week.
- Please find the full report here: https://media.marketnews.com/US_macro_weekly_250228_3f0cf485bb.pdf
