Crude

"The High Yield Bond Rally Won't Last" BofAML's 9 Reasons To Sell Any Strength In Junk

BofAML's Mike Cantopoulos' distaste for corporate fundamentals, displeasure with the efficacy of QE and easy monetary policy on spurring growth and inflation, and concerns that a further deterioration in credit conditions will create deeper economic troubles not appreciated by many have left credit markets with poor default adjusted valuations and little room to absorb a negative shock. He highlights nine key reasons below why BofAML believes this rally won't last (and in fact may have already seen its end).

Futures Sink Ahead Of Payrolls, Capping Worst Week For Stocks Since February

Ahead of the most important macro economic event of the week, US nonfarm payrolls (Exp. +200,000, down from 215,000 despite a very poor ADP report two days ago), the markets have that sinking feeling as futures seem unable to shake off what has been a steady grind lower in the past week, while the Nasdaq has been down for nine of the past ten sessions, after yet another session of jawboning by central bankers who this time flipped to the hawkish side, hinting that the market is not prepared for a June rate hike. Additionally, sentiment is showing little sign of improvement due to concerns over global-growth prospects as markets seek to close the worst week since the turmoil at the start of the year.

The Fallout From The "Devastating" Canadian Wildfire: Over 500,000 Barrels Offline, $1 Billion In Losses

Now that Canada has had a chance to evaluate the damage from the historic Alberta fire, the question on everyone's lips is what will be the near-term impact on oil production.  The most comprehensive answer provided so far comes from Morgan Stanley's Benny Wong who estimates that the total number of offline capacity will be anywhere between 400 and 500 mbbl/d, with the shut-in expected to last about 10 days, potentially reducing total market output by as much as 5 million barrels.

 

Futures Rebound As Crude Regains $45 On Canada Fears; Turkey Hammered

While markets remain relatively subdued ahead of tomorrow's nonfarm payrolls report, after several days of losses in US stocks which pushed the S&P500 to three week lows, overnight markets ignored the latest weak data out of China where the Caixin Services PMI was the latest indicator to disappoint (dropping from 52.2 to 51.8), and instead focused on crude, which rebounded from yesterday's post inventory-build lows and briefly printed above $45/bbl over uncertainty related to the impact of Canada wildfires on production and how long will last. The bounce in WTI has meant Brent briefly traded at parity with West Texas for the first time in 6 weeks. 

Where Does The U.S. Get Its Oil?

Ever wondered where the United States imports its oil from? Howmuch.net came out with some infographics to show that from 2000 to 2015. What we would highlight here is the notable shift from the U.S. depending heavily on Middle East countries and Mexico, to depending more on America's neighbor to the north, Canada.

Saxo Warns Further Upside For Crude Hard To Achieve After Market "Change Of Focus"

The dollar's gyrations remain a key source of inspiration for traders with the fundamental focus continuing to switch between falling US and rising OPEC production, according to Saxo Bank's Ole Hanson. Having seen calendar 2017 almost hit $50 last week the realisation that further upside may be hard to achieve may has helped trigger increased demand for protection.

Crude Slumps On Big Inventory Build Despite Biggest Production Plunge In 10 Months

Overnight exuberance sparked by lower than expected Cushing build reported by API is fading on the heels of June OPEC headlines of no production limits (and rising Saudi production) heading into DOE inventory data. Crude inventories printed a significantly higher than expected 2.78mm build but Cushing saw a smaller than expected build of 243k. Gaosline surprised with a 536k build (API 1.17m draw) and Distillates saw a smaller than API build of 1.26m barrels.  The biggest news was the biggest plunge in US production since July 2015, and yet inventories still rose suggesting that fundamentally this is and has been as much a demand story as one of supply (even as OPEC countries are happy to offset declining US output).

US Trade Deficit Tumbles As Overall Imports Plunge, Even As Oil Imports Continue To Rise

In a surprising development, the U.S. monthly international trade deficit decreased substantially in March 2016 from $47.0 billion in February (revised) to $40.4 billion in March, below the $41.2 billion expected, as exports declined by a modest $1.5 billion, a 0.9% drop to $176.62BN from $178.16BN in Feb. At the same time imports outright plunged by $8.1 billion, down 3.6% in March to $217.06BN from $225.13BN in Feb. Curiously this happened just as Canada announced a trade deficit of C$3.4 billion, the widest on record. In March, the US trade deficit excluding petroleum was $37.48 billion.

Global Stocks Slide As Dollar Continues Rising: Has The "Pricing In" Of Trump Begun

While there was no unexpected overnight central bank announcement unlike yesterday's surprise by the RBA which unleashed volatility havoc in the FX market, which promptly spilled over into all asset classes, overnight stocks around the world saw another leg lower without a tangible catalyst, while EM currencies fell to a one-month low after two Fed presidents raised concern investors had become too complacent in their belief that U.S. interest rate raises will stay on hold. Or perhaps all that is happening is that after ignoring Trump, the market is starting to finally price in the possible reality of the Donald in the White House (although as Jeff Gundlach pointed out, Trump would be a far better president for the economy and the market than Hillary or Bernie).

US Futures Tumble After China Devalues Yuan By Most Since August Collapse

The 'odd' regime shift in the relationship between USDJPY and US equities continues overnight. Following some visible-handedness and follow-through momentum, Yen is weakening against the USD - normally a big flashing green sign for risk-on pajama traders but China's biggest Yuan devaluation in 9 months (since the August turmoil) seems to have stolen the jam out of the bull's donut as US equity futures extend losses, AsiaPac credit risk jumps, and USD strength is weighing on crude prices.