US weekly EIA crude oil inventories -7614K vs -3500K expected

Weekly EIA petroleum inventories for the week ending June 18, 2021:

US weekly EIA crude oil inventories
  • Prior was -7355K
  • Gasoline -2930K vs +1050K exp
  • Distillates +1754K vs +1000K exp
  • Refinery utilization -0.4% vs +0.5% exp
  • Cushing -1833K
API data released late yesterday:
  • Crude -7199K
  • Gasoline +959K
  • Distillates +992K
  • Cushing -2550K
The surprise in this report is the drawdown in gasoline inventories. The headline was foreshadowed by yesterday’s API numbers so it wasn’t a big surprise but gasoline tightening up points to strong driving demand.

USDJPY up through 111.00

JPY weakness

The JPY weakness helping push USDJPY up through 111.00 and US 10 year yields snugged up to 1.50%. The next major test is up at 111.50 with some heavy daily resistance clustering up there.  US strength should remain heading into Friday on expectations of more inflationary signs from the US PCE deflator.

JPY weakness

German Foreign Minister Mass On Iranian nuclear talks

US/Iran nuclear deal news

  • German Foreign Minister Maas says there are still some issue in Iranian nuclear talks, but some progress has been made
  • Assumes there is a chance to seal the deal in near future, even after the Iran election
Expect any news of a deal to send oil lower, but any dips may be quickly bought as fundamentals look good for oil over the medium term regardless of the Iranian supply

Gold ETF’s fairly firm despite Fed’s dot plot shift

XAUSD

Gold ETF’s are firmer than I would expect.
In the last Fed tapering ‘tantrum’ of 2013 gold lost about 20% of its value.  Would have expected to see gold etf holdings to fall more quickly than the ETF holdings charts indicate. Levels steady at around 101.052M.
I still favour a sell on rallies up to gold spot around $1830.

XAUUSD

Oil at $100?

Growing voices for higher oil

Some reasons for oil to remain bullish as follows. Eamonn has been well on this all week.
  • India sales have rebounded in 1h of June
  • US/Iran deal not progressing well
  • COVID-19 vaccines are going well – less of a link between infections and hospitalisations/deaths
  • Lack of supply noted
  • Inventories keep falling – another private inventory last night
  • Market shrugs off OPEC+ sources looking to increase supply from August
Reasonable to expect intraday buyers at $71.50 with stops below support

Growing voices for higher oil

Risk is constructive, but FX space mixed

Quick look

Dollar is stronger today. Unsurprising with PCE expected to come in hot on Friday
Quick look 
Oil firmer on another draw in inventories despite OPEC+ sources hinting at August supply increase
Vix

Bond yields mildly higher

Bonds
Equity futures higher and volatility lower
Currencies
NZD pressured as lock down measures loom for Australia and NZ.

Some used vehicles in the US now costing more than new ones

Inflation

Inflation 
One area that US inflation is being keenly felt is in the used cars sector. Fed’s Powell expects this to be temporary and for supply/chip shortages to be rectified and for that market to calm down.
So how hot is it? Well some used cars are trading for more than their new price!
According to Bloomberg a typical 2019 Toyota Tacoma SR double cab pickup was just under $29,000. Two years later, the same car is going to dealers for $30,000 and then sold on to consumers for $33,0000. According to Black Book, which tracks car and truck data, used cars have climber 30% this year.

China financial press says China should be alert to the risks of a falling yuan

China Securities Journal with the piece, a note on China should be alert to risks regarding yuan depreciation.

Yuan has fallen in the past week or two (chart below is offshore yuan, CNH …  a rising USD/CNH is a depreciating CNH) but its difficult to think this has Chinese authorities too concerned, its barely retraced some of its 2020 gains.  Still, maybe its a signal the recent fall will not be allowed to accelerate.
China Securities Journal with the piece, a note on China should be alert to risks regarding yuan depreciation.