The Commodities Feed: WTI Spread Weakness
ING Economic and Financial Analysis | Feb 13, 2019 12:06AM ET
Your daily roundup of commodity news and ING views
U.S. crude oil inventories: The API is set to release its weekly inventory numbers later today, and expectations are that U.S. crude oil inventories increased by around 2.4MMbbls, according to a Bloomberg survey. The market also expects a 1.17MMbbls build in gasoline inventories and a draw of 1.67MMMbbls in distillate fuel oil stocks. The EIA is also scheduled to publish its latest Short Term Energy Outlook today. In last month’s report, it forecast 2019 and 2020 U.S. oil output to average 12.1MMbbls/d and 12.9MMbbls/d, respectively. OPEC will also release its monthly oil market report today.
WTI spread weakness: Prompt WTI spreads remain weak, suggesting comfortable supply in the spot market. The WTI March/April spread is trading at a discount of US$0.38/bbl at the moment, whilst the Apr/May spread is trading at a discount of US$0.53/bbl. In comparison, the front end of the Brent curve appears better supported, with the Brent Apr/May spread largely flat. The diverging trend between the two does appear to reflect a relatively more bearish prompt market for WTI, with expectations of further crude builds and reduced refinery run rates. The WTI/Brent is currently trading at a discount of US$8.80/bbl, compared to around a discount of less than US$7/bbl at the start of the month.
h3 Metals/h3Gold demand: Media reports suggest that Indian gold imports increased by 64% year-on-year to 46 tonnes in January 2019, as consumers increased gold purchases ahead of the wedding season. 2018 was a relatively dull year for India’s gold demand, with imports falling 20% YoY to 762 tonnes. However, 2019 could be a better year for gold imports on higher government spending ahead of general elections and monetary easing by the Reserve Bank of India. In China, the central bank increased its gold holdings for the second consecutive month, with total holdings now standing at 59.94mOz, up 380kOz month-on-month.
USD weighs on the complex: The USD index has appreciated by 1.6% since the start of the month, which has weighed on both the base and precious metals complex. The Bloomberg precious metals index has fallen 1.3% MTD, while the LME index is down 1.1%. Strong US jobs numbers at the start of the month, along with uncertainty over whether China and the U.S. will come to a trade deal ahead of the deadline at the end of this month have been supportive for the U.S. dollar.
h3 Agriculture/h3
Get The News You Want
USDA export inspections: Latest data from the USDA shows that 1.06mt of U.S. soybeans were inspected over the last week for export, this compares to 1.34mt for the same week last year. Year-to-date inspections total 22.63mt, which is still lagging significantly the 36.05mt inspected at the same stage last year. 487kt of soybeans inspected over the last week were destined for China. Meanwhile, corn export inspections over the week totaled 744kt, down from the 847kt for the same week last year. Cumulative inspections so far this marketing year total 23.21mt, compared to 15.74mt at the same stage last year.
h3 Daily Price Update/h3This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
by Warren Patterson
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.