– Was 1.90s this AM, now 1.5s choice.A classic of the ‚Buy the rumour – Sell the fact‘ genre.
I wonder how much of the £650k matched in this is Brady (the only fella that really knows what’s going on Re the vote etc)
In the Henry Hub market, those conditions have not been present since the pre-shale era, with the prices skyrocketing each week passing (last update here, one month ago, we were $1.5 below the current price), and the Supply/Demand balance overall not changing a lot.
During last couple weeks, we had a US lower 48 production increase, up to reach year to date high readings around 96 bcf, but it seems like we are not able to keep these levels, since at the start of this week we are again 1 bcf below these highs. What’s impressive, though, is the demand side. Indeed, power burns last months reached ‘off the charts’ value for the period and, even last week, with peaks around 36 bcf, the weather adjusted reading was astonishing. If we keep this path, we can easily see well over 50 bcf/d power burns during the peak of summer demand. This pattern clearly shows the fact that the classic gas to coal switching is not a factor anymore, even at prices close to double digit.
Then, finally the exports. Indeed, last week we touched LNG exports record, at 13.6 bcf, before falling into the classic spring maintenance (right now we are below 12 bcf).This is important for several factors, but here I want to highlight 2 points: (1) if we keep an average of 13 bcf/d for the summer, this will have a huge impact on End of Season storage number; (2) the potential issue of TTF cap in Europe.
About the first point, even if last week EIA printed a relatively looser (and personally unexpected) injection of 90 bcf, the trajectory of storage in my model is not safe at all, pointing to a relatively dangerous level of 3.18 tcf EOS (with the market being comfortable around 3.6 tcf). Obviously, it’s pretty important the weather, and below we can see that during the weekend we gained some demand (3-6 cooling degrees, CCDs) in both most important models, GFS and Euro Ensembles, with a hot upper ridge building in South-Central in the 8-14 day period. Moreover, we need to carefully watch at the start of the hurricane season (see below as well the first tropical storm, Alex, not affecting Henry Hub market).
About the second point, it’s even more important for worldwide natural gas market. Indeed if we watch the charts below (the sources are NGI, EIA ICE and ACCC), LNG exports have a lot of implications, for Asia and Europe. On the one had, we can easily see the path of LNG exports for the next couple years (we will almost reach 20 bcf/d in 2025, more or less 1/5 of the overall US production). On the other hand, we see that for now there is an aggressive delivery to Europe, where TTF price trades around $27-28 MM BTU, compared to the ASIA JKM trading $4-5 below.Right now the spread TTF-JKM favors the former rather than the latter. What if Europe decides to put a cap on TTF? Let’s say at $13-14 MM BTU?….
Andrea Paltrinieri
Associate Professor of Banking and Finance, Università Cattolica del Sacro Cuore
Natgasweather and Energy Working analyst
The new week is off
to a promising start. BTCUSD has added 4.6% in the last 24 hours, more than 4%
since the start of the day and is again testing the $31.0K mark. Cryptocurrency
investors were not spooked by Friday’s market decline, as key stock indices
were above the recent local lows and had been adding in recent hours.
The total
capitalisation of the crypto market, according to CoinMarketCap, rose 3.8% in
24 hours to $1.28 trillion, with the Bitcoin Dominance Index adding 0.2% over
the same period to Friday’s 46.5%. By Monday, the cryptocurrency fear and greed
index rose from 10 to 13 points. For about a month now, this indicator has been
steadily below 20 – in a state of extreme fear. While at current levels, BTCUSD
remains below the consolidation area at the lows of the middle of last year. It
is worth paying attention to the change in the trend seen in the weekly
candlesticks. Last week’s lows and highs were higher than the week before. The
intraday charts show that the price is being pushed up in the absence of
investors in the USA.
However, one must
make sure that this demand is global. Retail investors may try to promote the
start of the rise by feeding them an abundant supply. BTC was climbing to
three-week highs but lost almost all its gains by the end of the week. The
first cryptocurrency has been trading in a sideways range around the $30,000
level for more than three weeks. The bearish trend in the market has caused
long-term investors to capitulate. This factor signals that the price has
reached a multi-year bottom, according to CryptoQuant. Reserve Bank of India
Deputy Governor T. Rabi Sankar believes central banks‘ digital currencies could
completely displace private virtual currencies, including bitcoin.
May proved to be a
bad month for BTC and ETH miners. Bitcoin miners‘ earnings fell 21.9% for the
month, while miners of the second cryptocurrency fell 24.1%. The market will
draw its attention to The annual Consensus 2022 this week. This year’s Crypto
Industry Excellence Expo will be hosted in Austin, Texas, in June 9-12.
This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.
NOTE:
Previews are listed in day-order
RBA Announcement
(Tue):
The RBA is expected
to continue hiking rates, and analysts expect a 25bps increase to the Cash Rate
Target, taking it to 0.60% from the current level of 0.35%; OIS fully priced in
a 25bps hike, and imply that there is probability for a more aggressive move.
As a reminder, the central bank surprised markets at its last meeting by
delivering a larger-than-expected increase of 25bps (exp. 15bps), and stated
that further rises in interest rates would be required in the period ahead,
adding that it was committed to doing what is necessary to ensure that
Australian inflation returns to target over time. Minutes from that policy
meeting noted that the Board considered three options: a 15bps, a 25bps and a
40bps rate rise, ultimately coming to the conclusion that a 15bps increase
would have been inconsistent with the historical practice of changing the Cash
Rate in 25bps increments, while an argument for a 40bps increase could be made
given the upside risks to inflation and current very low level of interest
rates. Governor Lowe has also kept the door open regarding the pace of rate
increases, recently stating that he does not preclude bigger or smaller rate
moves in the future, and that the Board was not on a pre-set path. As such,
there are varied expectations for the upcoming meeting. Goldman Sachs anticipates
the RBA will lift rates by 50bps at its next two meetings; Westpac has upgraded
its call for June to a 40bps hike from a prior view of 25bps; AMP Capital
expects the RBA to stick with a 25bps move; ANZ Bank suggested that a 40bps RBA
hike in June will likely be discussed, but caveated that a Wage Price Index of
+1.0% would be needed to trigger a 40bps move, and this failed to materialise
with the Wage Price Index softer than expected at 0.7% vs. Exp. 0.8%.
RBI Announcement
(Wed):
Although India’s central
bank is expected to lift rates, there are a wide range of views regarding how
far the MPC will increase its Repurchase Rate (currently at 4.40%, Reverse Repo
Rate at 3.35%, Cash Reserve Ratio at 4.50%). The RBI surprised markets with a
rate hike during an off-cycle meeting last month, raising the Repurchase Rate
by 40bps via a unanimous decision, and also increased its Cash Reserve Ratio by
50bps. MPC members unanimously decided to remain accommodative, while focusing
on the withdrawal of accommodation, to ensure that inflation remains within the
target going forward, while supporting growth. Since that decision,
policymakers have made clear that rates will continue moving higher. Governor
Das noted that it broadly wants to increase rates in the next few meetings, and
that “the expectation of a hike is a no-brainer”. The Governor also said that a
reason for the off-schedule meeting last month was to avoid a much stronger
move at the upcoming meeting, while MPC member Varma said more than a 100bps
rate increase is needed very soon. These intentions to tighten policy by the
central bank are not too surprising given the surging inflationary environment;
the latest CPI data rose to 7.79% vs. Exp. 7.5% (Prev. 6.95%), for instance, a
level above the central bank’s 2-6% tolerance range, and has divided analysts’
forecasts between hikes of 25bps-75bps for next week.
ECB Announcement
(Thu):
Since its previous
meeting, Eurozone inflation has continued to pick up, with the headline rising
from 5.9% Y/Y to 7.4% Y/Y in April, and then extending to 8.1% in May. This has
struck a sense of alarm at the central bank, which has resulted in an
increasingly hawkish tone from members of the Governing Council. A blog post in
May penned by President Lagarde deviated from her usually non-committal stance;
she now expects “net purchases under the APP to end very early in the third
quarter. This would allow us a rate lift-off at our meeting in July”.
Furthermore, she added that “we are likely to be in a position to exit negative
interest rates by the end of the third quarter”, going on to state that “even
when supply shocks fade, the disinflationary dynamics of the past decade are
unlikely to return”. This was viewed as giving the green light for purchases
under APP to cease as of July 1st, paving the way for rate hikes at the July
and September meetings, analysts said. Note, despite the pressing need to move
on rates, the current sequencing between asset purchases and rate hikes means
that a hike to the deposit rate will not take place at the June confab. For
some of the more hawkish voices on the GC, such as Austria’s Holzmann, the
recent inflation metrics emphasise the need for a 50bps hike. However, this is
an issue that is unlikely to be resolved at the upcoming meeting given that the
discussion around the magnitude of a hike will likely be a feature of the July
gathering. In terms of market pricing, at the time of writing, the market looks
for around 120bps of tightening this year, which would imply 25bps hikes at the
four meetings after June, with an increasing likelihood of a 50bps hike at one
of those meetings. Given the need for flexibility and lack of certainty
surrounding the Eurozone outlook, it is hard to see how much vindication market
participants will get for the aforementioned rate path. We will also be
presented with the latest batch of macro projections from the Bank which will
inevitably see an upgrade to the current 5.1% forecast for 2022 inflation. Of
potentially greater interest will be the more medium-term forecasts and how
they align with the Bank’s 2% target. Finally, reporters will likely use the
Q&A segment to question Lagarde on reports over a “new tool” designed to
combat fragmentation in the Eurozone as the ECB begins to normalise policy.
That said, it is unlikely that Lagarde will give much away on this front and
instead stress the flexibility of existing tools.
Chinese Trade
Balance (Thu):
May’s trade balance
is expected to have contracted modestly to a surplus of USD 50.65bln (prev. USD
51.12bln). Lockdowns and port backlogs during the month are likely to have
adversely affected the data. Since then, however, China has taken measures to
stabilise the headwinds caused by its COVID situation on supply chains,
cautiously lifting restrictions into June. Ahead, analysts will also be eyeing
trade developments between the US and China; Deputy US Treasury Secretary
Adeyemo this week said that the Biden Administration was considering whether to
cut some tariffs on Chinese goods, whilst this sentiment was also echoed by
Deputy US Trade Representative Bianchi, who suggested that all options were on
the table regarding tariff decisions on Chinese imports, while the USTR is
seeking strategic realignment with China and a tariff structure that makes
sense.
Chinese
Inflation (Fri):
Inflation is
expected to have eased in May, with the annual rate of consumer prices forecast
at 1.8% Y/Y (prev. 2.1%), while annual PPI is seen at 7.7% Y/Y (prev. 8.0%).
The month was restricted by lockdowns in Beijing and Shanghai, which have eased
since. Further, the expected downside also comes alongside reports that China
has been purchasing Russian oil at a discount – thus addressing one of the main
drivers of the cost-of-living increases across almost all nations. On the flip
side, desks have been flagging that the rally in pork prices that began in
mid-March may continue.
CBR Announcement (Fri):
Some believe that
less hawkish policy from Russia’s central bank has helped to stabilise the
growth outlook. A Reuters poll saw economic forecasts improve in May despite
the sanctions being slapped on the country in wake of its aggression against
Ukraine. On the prices front, the Reuters poll suggested that inflation is seen
rising from 8.4% in 2021 to 16.4% by the end of this year, with analysts
cutting their view from forecasts made in April, when the consensus expected
inflation would rise to above 20% this year. The poll said that this should
continue to give the CBR space to lower rates further; it cut its key rate by
300bps to 11.00 in an unscheduled May meeting, and analysts think that rates
could fall to 8.00% by the end of this year (in April, there was an expectation
that rates would eventually fall to 10.5% this year).
US CPI (Fri):
As seen by the
market’s response to the April data, slowing annual rates of inflation may not
be enough to fuel ‘peak inflation’ narratives, with traders seemingly wanting
to see downside in the monthly metrics too. For the May report, the street
looks for core CPI prices to rise 0.5% M/M, slowing from the +0.6% pace in
April; the headline measure of CPI is seen picking up, however, to +0.7% M/M
from the +0.3% seen in April, buoyed by food and energy components as gasoline
prices continue to rise, and amid supply chain disruptions brought on by Russia’s
aggression in Ukraine. Credit Suisse writes “the gap between CPI and PCE
airfares (which is based on PPI) has now closed,” and the bank expects “strong
summer travel and a continued shift from goods to services spending to support
an elevated level of airfares, but growth should slow sharply from its elevated
readings in the past two months.” Analysts will also continue to monitor the
component for used vehicle prices; CS notes that the Manheim data for wholesale
prices in May picked up, which could suggest that the declines seen in the last
three CPI reports are unlikely to be repeated in May. CS also thinks that
shelter prices will remain firm, while risks for goods inflation are tilted
towards the upside given supply chain disruptions due to lockdowns in China.
“Overall, we expect YoY inflation likely peaked in March, but monthly inflation
readings are likely to stay uncomfortably above the Fed’s target in coming
months,” the bank writes, “the Fed is set on raising rates by 50bps at the June
and July meetings, but is looking for signs of deceleration in inflation to
support shifting to 25bps in September.”
This article
originally appeared on Newsquawk.
release should be enough to cover the loss of production at the refinery for 14 days, the government said.
Austrian Chancellor Karl Nehammer:
„Despite this incident, the security of fuel supply is assured, so no one need worry. There are still enough reserves available if the need arises.“
More at O&G Journal
The US employment data was released today with nonfarm payroll adding another 390K jobs. That comes after a 436K jobs increase in the prior month (was 428K). The expectations for the month was for 325K. Although lower than the prior month, it still represented a solid gain at this point in the cycle. Since January 2020 just before the impact from the pandemic, the number jobs gained have nearly erased the number jobs lost.
Payroll changes since January 2090
Other component pieces showed that the unemployment rate stayed steady at 3.6% (expected 3.5%). The participation rate increased to 62.3% from 62.5% contributed to the unchanged level in the unemployment rate. Average hourly earnings increase by 0.3% vs. 0.4% estimate. The year on year came in as expected at 5.2% (down from 5.5% last month). The underemployment rate moved up to 7.1% from 7.0%.
The May job gain was the slowest pace of growth since April of last year. Within the details, jobs fell by -61,000 in retail. The biggest gainer was leisure and hospitality which added 84,000 jobs. Consumers are shifting from buying on goods to buying services.
More recently, companies such as Twitter, Netflix, and Tesla whose Elon must said today that he plans on cutting 10% of the salary jobs, have said they look to trim jobs.
It is hard to call the job data soft, but let’s say there was a slowing of the trend which is a start.
The reaction the market saw stocks moving to the downside, and yields higher.
Looking at the major indices:
Dow industrial average fell -349.4 points or -1.05% at 32898.90. Last Friday the index closed at 33212.97
S&P index fell -68.38 points or -1.64% at 4108.43. Last week the index closed at 4158.33
NASDAQ index fell -304.15 points or -2.47% at 12012.74. Last week the index closed at 12131.13
Russell 2000 fell -14.62 points or -0.77% at 1883.05. Last week the index close at 1887.85
If you reword to put a positive spin on the price action in the stock market, the major indices all closed above their 200 hour moving average despite the week’s declines.
In the US debt market, yields move higher but came off the highest levels today. For the week, however, yields were sharply higher as traders rethought the idea of a pause in September:
2 year 2.661%, +2.7 basis points. The 2 year the yield is up from the last Friday’s closing level 2.484% for a gain of 18 basis points.
5 year yield 2.942%, +3.1 basis points. The 5 year yield is up from 2.692% last Friday or 25 basis points
10 year yield 2.946%, +3.3 basis points. The 10 year yield is up from 2.743% last Friday or +20 basis points
30 year yield 3.094%, +1.5 basis points. The 30 year yield is up from 2.972% last Friday or +12.2 basis points.
In the forex, the USD is the strongest of the majors while the JPY is the weakest.
The strongest to weakest of the major currencies
USDJPY: The USDJPY moved to the highest level since May 9 and in the process moved above the May 11 high of 130.80. The high price today reached 130.973. The pair is closing just above the May 11 high of 130.80. On the way to the upside, the price moved above a swing area between 130.49 and 130.553. That level will be a close risk level on Monday. Stay above is more bullish. On the topside the high prices from April and May at 131.242 and 131.342 are topside targets. They also represent 20 year highs for the USDJPY. This week, Microsoft lower their expectations for earnings and revenues on the back of a higher dollar. With the USDJPY trading near 20 highs, looking at that currency is a chief problem for multinationals who have not properly hedge their exposure.EURUSD: The EURUSD trade above and below its 100 and 200 hour moving averages currently at 1.0718. The current prices trading right around that level and punting to next week’s price action to determine more bullish more bearish bias. Move above the moving averages would be more bullish. Move below the moving averages would be more bearish. Of significance on the topside today was at the high price stalled against the high price from May 27. Keeping below the cycle high at 1.07857 from Mondays trade, gave the sellers the shorter-term bias control. However getting and staying below the 100 and 200 hour moving averages will still be eyed in early trading next week. GBPUSD: The GBPUSD use the 100 hour moving average as a ceiling both late yesterday and into today. That moving average currently comes in at 1.25647. The 200 hour moving averages at 1.25761. Stay below those moving averages keeps the sellers more in control. After the nonfarm payroll report, the price moved down to test a swing level at 1.2524. The price bounced back higher to retest the 100 hour moving average one last time before moving back to the downside and through the 1.2524 level. Bearish break. That level will be a close risk level early in the trading week. The price is closing the week near session lows at 1.2488. On the downside getting below the 38.2% retracement of the move up from the May 13 low at 1.24705 and staying below that level will be key for sellers/bears.Thank you for support this week. Have a great and safe weekend
Dow industrial average fell -348.58 points or -1.05% to 32899.71
S&P index fell -68.26 points or -1.63% to 4108.55
NASDAQ index fell -304.15 points or -2.47% to 12012.74
Russell 2000 fell -14.62 points or -0.77% to 1883.05
For the trading week
Dow industrial average fell -0.94%
S&P index fell -1.19%
NASDAQ index fell -0.98%
Russell 2000 index fell -0.25%
Technically, the NASDAQ index after trading below its 200 hour moving average (green line in the chart below) earlier in the session, is closing above the declining level (currently at 11971.16). Traders will be eyeing that moving average level next week as a barometer for bullish and bearish.
NASDAQ index closes just above its 200 hour moving average
Both the S&P and the Dow industrial average are also above their 200 hour moving averages:
For the S&P, the index is at 4072.43
For the Dow industrial average 200 hour moving average is currently at 32581.47
Next week, those moving averages will be in play and be used to define the short/intermediate-term bias. Stay above is more bullish. Move below is more bearish.
Iraq oil production will increase to 4.58 million barrels per day as of July following the OPEC+ decision
Oil production is currently at 4.44 million barrels per day
Current Iraq oil production
Looking at the global crude oil production, below is the list of top 14 oil producers:
Crude oil is trading at $118.60. That’s off the high of $119.40. The high price for the week reached $119.96