Crude oil settles between 100 and 200 hour moving averages

The price of WTI crude oil is settling at $104.58, up $2.06 or 2.01%.

The low for the day reached $101.54. The high reached $105.21.

A week ago, the price closed the week at $108.48. The low this week reached $95.13 on Wednesday. The high reached $111.42 on Tuesday.

Looking at the hourly chart, the price is settling between the 100 hour MA below at $102.90, and the 200 hour MA above at $106.12. Next week, traders will be looking for a break in either direction to provide the technical directional bias.

The weekly oil inventory data released on Thursday showed a much larger than expected build in inventories of .

Key event next week, Biden heads to Saudi Arabia.

This article was written by Greg Michalowski at www.forexlive.com.

The assassination of Shinzo Abe hit me hard as the news crossed late last night. Much will be written about his domestic successes and his record nine-year run as Prime Minister of Japan. He was incredibly ambitions, hard working and affable. He tamed a political landscape that was marked with turmoil.

For me, his political instincts were never on better display than in his courting of Donald Trump. In the aftermath of Donald Trump’s surprise election win, many liberal democratic leaders distanced themselves from him due to his unpopularity abroad.

Abe took a different path that proved to be much wiser for his country.

When you looked at Donald Trump’s rhetoric and economic priorities, one of
his main targets was likely to be Japan. They have a large trade surplus with the US, compete with the US in high-tech
manufacturing and the central bank frequently devalued the yen to be more
competitive.

But Abe knew that Trump highly valued personal relationships and could be swayed by them.

Abe didn’t waste any time after Trump was elected. He flew to New York
and gave him a gold-plated golf club and the worked his way to the front
of the line for a diplomatic visit.

Abe used golf and humility to become fast friends with Trump and while Japan wasn’t totally spared of Trump tariffs, he mitigated the damage with the power of his personality. It was a
tour-de-diplomatic-force. In the years that followed many countries would have been better off if they’d followed the same path. It was a clear demonstration of why Abe was at the year top of the list of modern politicians.

This article was written by Adam Button at www.forexlive.com.

Welcome to another edition of non-farm payrolls Friday, with the Canadian jobs report to be released at the same time. The consensus is 268K with average earnings up 5.0% y/y.

I don’t see this report as a particularly meaningful one in terms of how the market might react. The market is struggling with both growth and recession fears. If anything, I’d make the argument that a jobs number closer to zero is ideal because the Fed wants to see some softening in the labor market before pausing rate hikes.

Equally important might be a pair of appearances from the Fed’s Williams, who is in Puerto Rico. He speaks on a roundtable at 8:30 am ET and again at 11 am ET. The latter speech is slated to be on the economic outlook and any hint at slowing the pace of hikes would be market moving.

This article was written by Adam Button at www.forexlive.com.

• Henry Hub: the day after Freeport – By @andrepaltry
• Italy Economy Minister Franco Says Inflation Doesn’t Seem Likely To Decline Quickly
• NHK – Former Japanese Prime Minister Shinzo Abe Has Died
• ECB’s Visco: Rate Hike Bigger Than 25 Bps Could Be Appropriate In September
• Italian Industrial Output MoM Act: -1.1% Prev: 1.6% Fcst: -1.1%
• NFP won’t let me be.
• Taking a Deep Breadth: The ARMS/TRIN Index – by PiQ’s @moved_average
• France Trade Balance (SA) (May) Act: -13B Prev: -12.156B Fcst: -12.8B
• China gears up for disasters as flood season enters ‚critical period‘
• Bank Of England Deputy Governor Sam Woods Speech – Striking the balance
• The @Newsquawk Euro Market Opening note and podcast

This article was written by Ryan Paisey at www.forexlive.com.

My friend, and genuine expert in Nat Gas markets, Andrea Paltry has kindly written a note just for me to share on ForexLive

Henry Hub natural gas prices are currently trading down almost 15 cents with the most traded August ’22 contract at $6.143 MMBTU. The entire forward curve is down, with couple different trends to stress (see the graph below) compared to almost a month ago: (1) the strong backwardation we had a few weeks ago, if we consider all the Cal’22 (calendar’22) has gone away.

If we compare the week of May 4th with the current one, we see a change of the curve shape in Cal’22 from a decent backwardation to a flat/contangoed one; (2) the strong winter premium, the so-called ‘widow maker’ spread H/J 2023 (March/April’ 23) has almost halved from $1.9 to $1 right now. These elements tell us that the situation of Henry Hub market has become less tight, or better less precarious than a few weeks ago.

There have been a few factors having a huge impact on the Supply/Demand balance and the trajectory of End of Season storage. The first, and maybe the most important one, was the well-know Freeport explosion. On the technical side, Freeport was able to export 2.2 billion of cubic feet a day (bcf/d) in terms of LNG. This was a good percentage considering the maximum capacity of LNG exports for US this year just below 14 bcf/D. The pure math tells us that if (and this is a big IF) the shut down is for about 100 days (I personally think it’s just a floor), we have to add 220 bcf to our End of Season storage model. I personally was close to 3.2 trillion cubic feet (tcf) for that, now I’m more close to 3.45 tcf. I do think this is not a comfortable level by any chance, however 220-270 bcf give for sure a sense of relief to the market.

This ‘accident’ however had a huge impact also on TTF European gas prices, since 60% of overall Freeport export was directed to Europe. This is part of the TTF spike up to euro 185 MwH. The second is related to supply. During last couple weeks, we had a US lower 48 production increase, up to reach year to date high readings around 97.2 bcf. This is a decent production reading that I expected in Q3, however we need to understand if we are able to keep it during next weeks. The other components of the demand side remains pretty good. Even if not ‘off the charts’, power burns readings averaged well over 40 bcf/d, a good value weather adjusted.

This pattern clearly shows the fact that the classic gas to coal switching is not a factor anymore, even at pretty high prices.

Then the weather. Over the next couple weeks, we will have above normal demand in terms of cooling degrees as you may see in the charts below. Barring euro and gfs ensemble run-to-run variations, we will have well above 30 year average demand, with a strong ridge over the south for the next 3-5 days (see the third chart below). Then for the second week (first chart) we will have slightly above normal temperatures over most of the US. This will have a decent impact on the next 3-4 storage numbers.

And finally the storage number, yes the big issue. Over the last 3 weeks, EIA has given storage number difficult to interpret, not in line with my model (and with most of the analysts), showing first a ton of loosening, then, suddenly, yesterday a ton of tightening. Indeed, as you may see below, yesterday EIA printed 60 bcf injection, versus my forecast at 73 bcf (close to all analysts’ estimates). This number is pretty tight in any metric, week over week, versus the other 4 weeks’ average. And this poses further risk for End of season storage trajectory, even without Freeport, especially if we keep this hot pattern in US. So, what’s next? Maybe EIA will help us in the next coupe printing.

Andrea Paltrinieri
Associate Professor of Banking and Finance, Università Cattolica del Sacro Cuore
Natgasweather and Energy Working analyst

This article was written by Ryan Paisey at www.forexlive.com.

• Italy Economy Minister Franco Says Inflation Doesn’t Seem Likely To Decline Quickly
• Says Q2 Probably Saw „Robust“ GDP Growth In Italy
• Says Government Will Continue To Take Steps To Limit Impact Of High Energy Prices On Firms And Households

Nothing makes me feel more like the peak rate of inflation may be behind us quite like politicians finnaly coming around to the idea that inflation is a concern – 😉

This article was written by Ryan Paisey at www.forexlive.com.

PiQ’s (aka my outift) very own Ioan Smith (AKA @moved_average) has just written a piece for Capital, so it’s only right that I share it with you fine people too

Boris and Betty: Trading GBP amid political armageddon

Link to Full Piece

Summary…

UK Prime Minister Boris Johnson announced his resignation this morning after another wave of cabinet departures overnight made his position untenable.

He will remain in his post until a new leader is appointed no later than the Conservative Party’s annual conference in October. Parliament is due to break up for summer recess on July 21 so the process may have to be expedited. How long the process takes depends on how many candidates come forward for the role, but it will provide a period of headline risk affecting GBP/USD.

As he continued to lurch from one crisis to another the GBPUSD, (colloquially known as Betty from Cockney rhyming slang for cable – Betty Grable), took a battering.  As the political landscape in the UK deteriorated the currency bore the brunt of the upheaval.  A currency’s value is influenced by more than just economic factors like interest rates and inflation.  Even the most experienced market players can get outflanked by political influence on currency trading.

Knowing how politics works in relation to foreign exchange markets can be useful when it comes to your trading decisions. Countries that have strong political stability are far more attractive to foreign investors.  As such political stability can have a dramatic effect on currency rates. Serious inquiries into government conduct can destabilise the economy and weaken the currency.

This article was written by Ryan Paisey at www.forexlive.com.

For those interested, and I’m dubious that you should be overly interested..

Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Amsterdam on Wednesday and Thursday, 8-9 June 2022

As Newsquawk note..

As ever, given the time lag between the announcement and the publication of the accounts, traders will take greater guidance from recent data points and commentary from officials. Furthermore, when it comes to the issue of fragmentation, the ECB carried out an ad-hoc meeting to address the matter and therefore the account will offer little in the way of insight on that front.

Some Key Headlines:

• Most Measures Of Longer-Term Inflation Expectations Appeared To Be Still Broadly Anchored
• It Was Generally Considered That Stagflation Was An Unlikely Outcome
• Inflationary Pressures From Re-Opening In The Tourism Sector, Which Had Been Prominent In The May Figures, Were Likely To Continue In The Coming Months As Tourism Opened Up More Widely
• It Was Necessary To Avoid Gradualism Being Seen As Precluding Interest Rate Steps In Excess Of 25 Basis Points
• Taking The Indirect Effects Of Energy Prices Out Of The Core Inflation Projection Would Result In A 2.0% Projection For Core Inflation In 2024
• A Number Of Members Expressed An Initial Preference For Keeping The Door Open For A Larger Hike At The July Meeting

This article was written by Ryan Paisey at www.forexlive.com.

U.S. Challenger Job Cuts (Jun) Act: 32.517K Prev: 20.712K

This article was written by Ryan Paisey at www.forexlive.com.

US Market Open: Constructive risk sentiment though action is choppy, GBP bid as Johnson to resign

Full note

Good morning USA traders, hope your day is off to a great start! Here are the top 5 things you need to know for today’s market.

Click below to read the full report and listen to the guys doing the podcast.

5 Things You Need to Know

• European bourses are firmer across the board, Euro Stoxx 50 +1.5%, in a continuation of the constructive APAC handover though action remains choppy.
• Bourses, and US futures, were bolstered amid reports that China is considering USD 220bln of stimulus with unprecedented bond sales, via BBG.
• DXY takes a reprieve and resided sub-107.00 with antipodeans leading on sentiment and GBP bid amid the looming resignation of PM Johnson
• Reports on this dented Gilts, though the complex more broadly was briefly hit on the China stimulus headline
• Senior US State Department Official says no announcement on China tariffs is expected from Secretary of State Blinken at his meeting with China’s Foreign Minister Wang Yi

This article was written by Ryan Paisey at www.forexlive.com.