AMERICAS OIL: WTI Crude Oil prices are higher after Trump threatened Venz oil
Mar-24 18:37
March 24 - Americas End-of-Day Oil Summary: WTI Crude Oil prices are higher on the day after Trump threatened countries that import Venezuelan oil with a 25% tariff. Earlier, reports that a drone targeted a CPC pumping station, raised supply risks and uncertainty around any ceasefire arrangement in Ukraine.
- Trump announced he would impose a 25% tariff on countries that buy Venezuelan crude from April 2.
- OPEC+ is likely to stick to its plan to raise output for a second consecutive month in May, amid steady oil prices and plans to force some members to compensate for past overproduction, Reuters reports citing sources.
- Russia’s defense ministry claims that Ukraine targeted the CPC Kropotkinskaya pumping station again on March 24 according to a statement on Telegram but the drone was shot down.
- Attacks on Russian infrastructure are still being seen as peripheral to the global oil supply picture according to RBC’s head of commodity strategy Helima Croftt.
- Following US-Ukraine talks in Saudi Arabia on the weekend, U.S. and Russian officials have held talks on Monday in Saudi Arabia about progressing ceasefire efforts with Ukraine.
- Oil markets have been concerned that increased trade protectionism will weigh on global growth with heightened tension amid uncertainty over the details of the tariffs.
- Indian refiners are set to issue fewer spot tenders for crude oil purchases in the coming months, according to company sources cited by Reuters, as Russian supplies remain ample.
- The latest US sanctions targeting Iranian oil flowing to Chinese refiners have increased uncertainty, with market sources offering differing opinions on the impacts, according to Energy Intelligence.
- The US extended Venezuela’s Chevron oil deadline through May 27, the US Treasury’s Office of Foreign Assets Control said in a statement.
- The NOAA 6–14-day outlook is bearish for heating demand but supportive of some cooling demand in the South through Apr 6 with below-normal conditions in the Upper Midwest and Northern New England 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 reaches of PADD 2 and PADD 1 as well as PADD 5 late in the period.
- US cracks were lower off a rise in crude oil prices while refined product prices advanced at a more tepid pace. Renewed trade concerns were more salient in crude than in RBOB or ULSD markets.
- WTI May futures were up 1.2% at $69.11
- WTI June futures were up 1.1% at $68.67
- RBOB Apr futures were up 0.6% at $2.21
- ULSD Apr futures were up 0.5% at $2.26
- US gasoline crack down 0.2$/bbl at 23.73$/bbl
- US ULSD crack down 051$/bbl at 24.15$/bbl
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STIR: July Fed Cut Priced Back In
Feb-21 21:14
The next Fed rate cut is again fully priced for the July meeting, following a 6bp futures-implied move today on the back of soft Services PMI data exacerbated in the afternoon by a risk-off move in equities.
- This comes following a run of mixed-at-best data (retail sales, housing starts, various consumer and business surveys) in the last week and is the first time a July cut has been priced since Feb 7 (just prior to January payrolls data) - previously it was priced for September.
- There's now almost two rate cuts priced through the end of the year (47bp through the December FOMC, an increase of 9bp on the day), the most seen since Feb 5.
- For the week, implied 2025 rate cuts have ranged between 35 and 48bp (the latter seen in the last hour of trade)
- See our US Macro Weekly for more on what to watch next week, with PCE and GDP the data highlights.
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Feb 20) | Chg Since Then (bp) | End of Last Week (Feb 14) |
| Mar 19 2025 | 4.32 | -1.5 | -1.5 | 4.32 | -0.9 | 4.32 |
| May 07 2025 | 4.25 | -8.4 | -6.9 | 4.28 | -3.1 | 4.28 |
| Jun 18 2025 | 4.14 | -19.4 | -11.0 | 4.18 | -4.2 | 4.18 |
| Jul 30 2025 | 4.07 | -26.2 | -6.8 | 4.13 | -6.0 | 4.13 |
| Sep 17 2025 | 3.97 | -35.7 | -9.5 | 4.04 | -6.5 | 4.04 |
| Oct 29 2025 | 3.92 | -41.2 | -5.5 | 4.00 | -8.0 | 3.99 |
| Dec 10 2025 | 3.86 | -47.3 | -6.1 | 3.95 | -8.8 | 3.93 |
US TSYS: Late Risk-Off Support Lends to Weak Data Support
Feb-21 20:29
- Treasuries look to finish near session highs Friday, second half support spurred by risk-off sentiment as wires recirculated report of a new Covid strain out of China with "pandemic potential" (SCMP).
- Tsy Mar'25 10Y futures climbed to 109-24 high (+18.5), still shy of initial technical resistance at 110-00 (High Feb 7 and the bull trigger); 10Y yield fell to 4.4042% low; curves mixed: 2s10s -1.123 at 22.205, 5s30s +.956 at 40.929. Heavy volumes (TYH over 3.3M tied to quarterly roll action, June takes lead next Friday).
- Early Treasury support triggered by weaker than expected data: flash S&P PMIs w/ composite at 50.4 (cons 53.2) after 52.7 in Jan, services (49.7 vs cons 53.0, after 52.9); and existing home sales were softer than expected in January at 4.08m (cons 4.13m) after an upward revised 4.29m (initial 4.24m). UofM data showed a worrying rise in long-term inflation expectations alongside a deterioration in consumer sentiment.
- US stocks fell hard, DJIA back to January 21 levels while SPX Eminis and Nasdaq withdrew to last Thursday lows. Trading desks also cited today's call weighted option expiration that has historically leaned toward bearish price action in the week after.
- Late weekend focus on German elections take focus over the weekend, before New Zealand retail sales and German IFO data cross. There is a public holiday in Japan Monday.
LOOK AHEAD: The Week Ahead: 2nd Q4 GDP and January PCE Reports
Feb-21 20:05
- The upcoming US economic calendar is backloaded, with the second release for Q4 national accounts on Thursday before the January PCE report on Friday. Real GDP growth is seen confirming what was at the time a softer than expected 2.3% annualized in Q4, whilst there will also be a first estimate for real GDI growth after 2.1% in Q3.
- Much of the relative GDP weakness in Q4 after two quarters averaging 3.0% came from a large drag from inventories. It should continue to show signs of robust domestic demand after personal consumption increased 4.2% annualized in the advance release.
- However, January’s monthly report is likely to show consumption got off to a much weaker start of 2025. Recall that retail sales were far weaker than expected in January as they slid -0.9% M/M (cons -0.2) along with an even larger miss for the control group at -0.8% M/M (cons 0.3) to more than unwind the previously strong 0.8% M/M increase in December. Early days for the Bloomberg consensus currently see real personal spending growth of -0.1% M/M in Jan after 0.4% in Dec.
- As for inflation, Governor Waller cited estimates for core PCE inflation of around 0.25% M/M and it likely rounding to 2.6% Y/Y with some help from modest upward revisions.
- Base effects will have helped it drop from the 2.8% Y/Y averaged in Q4 whilst recent run rates should look a little more favorable (2.1% and 2.4% annualized over three and six months assuming no revisions). Note that revisions will go back to Q4, reflecting the new seasonal adjustment factors for both CPI and PPI, but longer dated revisions will have to wait for the comprehensive national account revisions due in September.
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