AMERICAS OIL: WTI crude rallied amid headlines from both the US and Russia
May 28 - Americas End-of-Day Oil Summary: WTI crude rallied amid headlines from both the US and Russia suggesting a more hawkish take on resolving the Ukraine-Russia conflict. The OPEC+ meeting was somewhat supportive though it won’t act on the next round of production increased until Saturday.
- At its meeting today, OPEC+ reaffirmed the level of overall crude oil production for OPEC and non- OPEC participating countries as agreed in the 38th ministerial meeting until 31 December 2026, Reuters said.
- Amena Bakr on X regarding today’s OPEC meetings: “No changes will be made to the group cut of 2 million bpd that’s in place till the end of 2026.”
- A smaller group led by Saudi Arabia will decide on May 31 whether to further unwind voluntary cuts.
- Goldman sees one last 411k b/d production increase in July at OPEC+’s virtual meeting on May 31.
- Three Reuters sources said that OPEC+ is likely to commit to an accelerated oil output hike for July at its meeting May 31. Bloomberg sources previously reported something similar last.
- President Zelenskiy called for further US sanctions on Russia’s energy sector.
- CNN reports suggest that President Trump could move ahead with new sanctions on Russia in the coming days as he grows frustrated with Russian strikes on Ukraine.
- US-sanctioned tankers have emerged in the Russia-India crude trade, Bloomberg reports.
- This was followed by Kremlin comments which called German provisions on long-range missiles to Ukraine a provocation
- The Trump administration has issued a new authorisation for Chevron that would allow it to keep assets in Venezuela, but not to export oil or expand its activities, Reuters reports.
- The wildfire threat has increased in Alberta after the number of out-of-control blazes rose to 20 from 10 on Tuesday, Bloomberg said.
- Venezuela’s Interior Minister said that nearly 60 attacks against oil facilities had been neutralized in recent days.
- Exxon Mobil’s 250,000 b/d Joliet, Il, refinery brought its cat cracker unit back to full capacity.
- A WSJ survey indicated US crude stocks fell 600,000 bbl last week while gasoline fell 300,000 bbl and distillates rose 900,000 bbl while refinery runs rose 0.8%.
- MNI Commodity Weekly: {https://enews.marketnews.com/ct/x/pjJsdgSKnusI6a0yJUsiHQ~k1zZ8KXr-kA8x67DWJ-jptIPjO1OcQ}
- US cracks are mixed today ahead of delayed US inventory data. While flat prices are strengthening, gasoline’s gains are outpaced by a rise in underlying WTI.
- WTI July futures were up 1.6% at $61.84
- WTI Aug futures were up 1.4% at $61.20
- RBOB Jun futures were up 0.6% at $2.09
- ULSD Jun futures were up 0.3% at $2.09
- US gasoline crack down 0.3$/bbl at 24.66$/bbl
- US ULSD crack down 0.1$/bbl at 25.08$/bbl
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USDJPY TECHS: Fades Off Resistance At The 20-Day EMA
- RES 4: 147.26 50-day EMA
- RES 3: 146.54 Low Mar 11
- RES 2: 144.47 20-day EMA
- RES 1: 144.03 High Apr 25
- PRICE: 142.66 @ 16:46 BST Apr 28
- SUP 1: 141.49 Low Apr 23
- SUP 2: 139.79 1.382 proj of the Feb 12 - Mar 11 - 28 price swing
- SUP 3: 138.82 1.500 proj of the Feb 12 - Mar 11 - 28 price swing
- SUP 4: 138.07 Low Jul 28 ‘23
Recent gains in USDJPY are considered corrective. Resistance to watch is 144.47, the 20-day EMA. A clear break of this level would signal scope for a stronger recovery. Resistance at the 50-day EMA, is at 147.26. Moving average studies are in a bear-mode position highlighting a dominant downtrend. A resumption of the trend would open 139.79 next, a Fibonacci projection.
US DATA: Manufacturing Prices Paid Picked Up Again In April (2/2)
Meanwhile the average of current Prices Paid indices across four regional Feds (Dallas, Kansas City, New York, Philadelphia - excludes Richmond which publishes a % change and not an index) hit a 33-month high (Jul 2022) in April.
- Three of the four in our index saw an increase in April vs March with the exception of KC which was unchanged, and notably Richmond prices paid hit the highest since January 2023.
- Current consensus is for ISM Manufacturing Prices Paid to rise to 73.0 in April from 69.4 prior, marking a fresh post-June 2022 high.
- The regional Fed readings suggest an increase in that category is certainly to be expected, and the magnitude seen in consensus in the low 70s doesn't appear to be far off.
US DATA: Regional Feds Point To Sharp ISM Manufacturing Pullback In April (1/2)
Four of the five major regional Fed manufacturing surveys deteriorated in April (Philadelphia, Richmond, Kansas City, Dallas - the exception was New York which was still very weak) versus March.
- This dragged the average of the 5 indices to the lowest since May 2020. At that time, the ISM Manufacturing index was in the low 40s.
- Average forward-looking expectations fell to the lowest since October 2022 on average in the 5 Fed surveys.
- This was the 3rd consecutive sequential deterioration in the 5-Fed index average, and we would expect the April ISM Manufacturing index to do likewise in April (50.9 in January, 50.3 in February, 49.0 in March).
- Current consensus is for ISM manufacturing (out Thursday at 1000ET) to print 48.0 in April, but we would see the risks to this firmly to the downside.
