AMERICAS OIL: WTI Crude Oil is lower on the day in volatile trading

Apr-01 18:37

April 1 - Americas End-of-Day Oil Summary: WTI Crude Oil is lower on the day in volatile trading after a 3% rally yesterday amidst supply concerns from potential US tariffs on buyers of Russian and Iranian oil but as concerns with slowing economic growth weigh on sentiment.

  • US President Trump has said this week that he believes Putin won’t “go back on his word” and he wants him to make a deal but will introduce “secondary tariffs on Russian oil” if needed.
  • US reciprocal tariffs are to be announced at 4pm ET (9pm BST) on Wednesday. Press secretary Leavitt said that there would be “no exemptions at this time”.
  • Caixin China manufacturing PMI rose 0.4 points to 51.2 in March signalling moderate growth in the sector and follows the official PMI yesterday at the highest since March 2024 at 50.5. US and EU manufacturing data today is due today.
  • The API US oil inventory data is due at 16:30ET ahead of the EIA Weekly Petroleum Status Report tomorrow. A WSJ survey forecast a crude oil stock draw of 700,000 bbl, a gasoline draw of 1.4m bbl, and a distillate draw of 600,000 bbl. Runs are seen up 0.3%.
  • Rabobank expect Brent to fall to $67.50/b by the end of 2025, with a full year average of $70.50/b.
  • Albertan oil sand producer Syncrude is running at reduced rates ahead of maintenance work according to Bloomberg.
  • Western Canadian Select’s discount to WTI narrowed to $9.45/bbl from $10.15/bbl amid oil sands maintenance, low inventories and doubts about looming US tariffs.
  • The NOAA 6–14-day outlook is neutral for heating demand but supportive of cooling demand in the West through Apr 14 with below-normal conditions in Texas, 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 PADD 1 late in the period.
  • US cracks were higher on the day ahead of API inventory data and expected refined product stock draws. However, the ULSD crack remains shy of the $26/bbl level seen in late March.
    • WTI May futures were down 0.4% at $71.20
    • WTI June futures were down 0.3% at $70.76
    • RBOB May futures were up 0.6% at $2.30
    • ULSD May futures were up 0.5% at $2.29
    • US gasoline crack up 0.8$/bbl at 25.50$/bbl
    • US ULSD crack up 0.6$/bbl at 24.96$/bbl

Historical bullets

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.
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Significant dovish adjustment over the week:

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MACRO ANALYSIS: MNI US Macro Weekly: No Escaping Tariff Distortions

Feb-28 21:12