In today’s briefing:
- Positioning Watch – Is the Santa Rally at risk of being canceled? Not yet..
- OPEC Cuts Demand Forecasts for Fifth Straight Month; EIA Lowers Price Outlook on Supply Glut
- [ETP 2024/50] WTI Rebounds on Outlook of Better Demand in 2025; Henry Hub Rises but Remains Volatile
- ELTs Undertake An Impressive ‘Sustainable March’ In The US
- Globalisation: Same, Same but Different
- HEW: Festive Policy Disagreements
- CX Daily: How China is Cracking Down on Border Trade Smugglers
Positioning Watch – Is the Santa Rally at risk of being canceled? Not yet..
- Hi everyone, and welcome back to our weekly positioning update.
- I’ve been puzzled over the past weeks of just how much risk assets have been denying the underlying macro trends, and it very much mimics the pattern we saw in Q4 2023.
- Markets are not really responding to macro unless there is a major surprise to either side of the economic consensus as this is the only scenario which can change the expected rate path of the Fed.
OPEC Cuts Demand Forecasts for Fifth Straight Month; EIA Lowers Price Outlook on Supply Glut
- OPEC cut its 2024 demand growth forecast for the fifth consecutive time this year. It lowered its 2024 and 2025 forecast 11.5% and 5.8%, respectively.
- The EIA and IEA lowered their 2024 demand projections by 10.1% and 8.7%, respectively. However, they raised their 2025 projections by 5.7% and 11.1%, respectively.
- The EIA reduced 2024 and 2025 price forecasts for WTI and Brent, citing higher non-OPEC+ production and subdued demand, which are expected to drive global inventory builds after Q1 2025.
[ETP 2024/50] WTI Rebounds on Outlook of Better Demand in 2025; Henry Hub Rises but Remains Volatile
- For the week ending 06/Dec, US crude inventories fell by 1.4m barrels, beating expectations of a 1m barrel decrease. However, gasoline and distillate stocks rose more than expected again.
- US natural gas inventories fell by 190 Bcf for the week ending 06/Dec, beating analyst expectations of a 175 Bcf drawdown. Inventories are 4.6% above the 5-year seasonal average.
- Wells Fargo raised its 12-month PT for Chevron but lowered targets for Shell and Occidental. Exxon targets a CAGR of 10% in earnings and 8% in cash flow through 2030.
ELTs Undertake An Impressive ‘Sustainable March’ In The US
- 79% of ELTs consumed by end-use markets, up 10.5%
- Tire-derived fuel tops ELT use, followed by ground rubber
- Sumitomo Rubber USA announces closing of Buffalo plant
Globalisation: Same, Same but Different
- Contrary to popular belief, the upward trend in global US$ exports, which has been in place since 1948 remains intact. World trade openness too is higher today than pre-GFC.
- US consumers are the richest. However Asian affordability is growing quickly . The region’s share of the global imports is already on par with Europe’s.
- Globalisation is not reversing but evolving. Regional trade is driving world exports while world manufacturing production chains are transitioning from horizontal to vertical integrated.
HEW: Festive Policy Disagreements
- The seasonal festival of packed macro releases before Christmas has shown policy divergence and surprise, with the SNB and the Bank of Canada cutting by 50bp, Brazil hiking by 100bp, and the ECB’s 25bp cut as expected.
- There is a firm consensus for no change for the BoE and a 25bp cut for the Fed, with one of the other announcements expected to shock.
- The UK CPI inflation call is relatively high at 2.6% on the data front.
CX Daily: How China is Cracking Down on Border Trade Smugglers
- Smugglers / In Depth: How China is cracking down on border trade smugglers
- Pension /: China’s personal pension pilot is ready to go nationwide, sources say
- EVs /: Baidu-Geely EV brand pledges to maintain deliveries as backers’ support wavers
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