API Reports Unexpected Crude Oil Inventory Build

Commodity

Summary:

The American Petroleum Institute (API) estimated that crude oil inventories in the United increased by 1 million barrels for the week ending January 17.

Analysts surveyed by Reuters had expected the API to report a draw of around 1.6 million barrels.

For the week prior, the API reported a draw of 2.6-million-barrel in U.S. crude oil inventories in the midst of build season, while product inventories saw a hefty build for multiple weeks in a row.

In 2024, crude oil inventories dropped by more than 12 million barrels, according to the API’s inventory data, with the downward trend continuing beyond the new year.

Earlier this week, the Department of Energy (DoE) reported that crude oil inventories in the Strategic Petroleum Reserve (SPR) rose by 0.3 million barrels as of January 17. SPR inventories are now at 394.6 million barrels, a figure that is still 239 million less than the inventory when President Biden took office.

At 4:52 pm ET, Brent crude was trading down $0.38 (-0.48%) on the day at $78.91. The U.S. benchmark WTI was also trading down on the day by $0.45 (-0.59%) at $75.73—more than $2 per barrel under last week’s level.

Gasoline inventories rose this week by 3.2 million barrels after last week’s large 5.39-million-barrel increase. As of last week, gasoline inventories are slightly below the five-year average for this time of year, according to the latest EIA data.

Distillate inventories rose by 1.9 million barrels, which follows last week’s large 4.88-million-barrel increase. Distillate inventories were about 4% below the five-year average as of the week ending January 10, the latest EIA data shows.

Cushing inventories—the benchmark crude stored and traded at the key delivery point for U.S. futures contracts in Cushing, Oklahoma—rose by 500,000 barrels, according to API data, after rising by 573,000 barrels in the previous week.

Source:oil price

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Warren Takunda

Cryptocurrency

With the dust settling around the “Trump pump” trade, Bitcoin price has established a range between $100,000 and $110,000 since the newly elected US president was inaugurated. The crypto asset jumped 3.78% on Jan. 21, but its price action has started to consolidate over the past 24 hours.

With BTC failing to demonstrate a clear directional headwind on the lower time frame (LTF), one analyst believed that the sideways movement might extend until the end of the month.

Will quantitative easing fuel Bitcoin’s next rally?

Krillin, a full-time crypto trader, hinted at the possibility of sideways consolidation between $100,000 and $110,000 until the Federal Open Market Committee (FOMC) meeting takes place Jan. 28–29. The trader said,

“Assuming no BoJ scam, we likely chop between 100k and 110k till FOMC end of month.”

The analyst indicated the possibility of another dump since the current expectation is that there will be no interest rate cuts on Jan. 29. The CME FedWatch tool currently projects a 99.5% chance that interest rates will remain unchanged at 4.25% to 4.5%.

However, a dovish press conference or any hints at quantitative easing (QE) to address market functioning might trigger the next leg up for risk assets.

Data suggests that as of Jan. 22, the US national debt stands at $36.21 trillion, more than the allotted amount of $36.1 trillion. With the debt ceiling now reached, the forecasted solution is to raise it again. This is not new for Congress, with the administration adjusting the debt ceiling 78 times since 1960.

This might lead the government to finally partake in QE, where the US Federal Reserve could resort to large-scale asset purchases. This would inject liquidity into the market, a positive catalyst for risk assets. One particular way to track liquidity injection would be to identify a reversal in the Fed’s balance sheet trends. The balance sheet has declined since April 2022, falling from almost $9 trillion to $6.8 trillion on Jan. 15 because of quantitative tightening (QT). Bitcoin Price Probably ‘Chops’ in $100K–$110K Range Until FOMC Meeting_1

Bitcoin Price Probably ‘Chops’ in $100K–$110K Range Until FOMC Meeting_1

Federal Reserve balance sheet. Source: Federal Reserve

Yet, the above pathway remains subjected to market speculations, and a more transparent path will only be evident after Jan. 28 and 29.

Bitcoin capital inflows dropped after $100,000 was hit

While the market expected Bitcoin to enter a period of price discovery and aggressive bullish action after $100,000, data from Glassnode indicated the lack of fuel after the milestone was reached. Bitcoin Price Probably ‘Chops’ in $100K–$110K Range Until FOMC Meeting_2

Bitcoin Price Probably ‘Chops’ in $100K–$110K Range Until FOMC Meeting_2

Bitcoin realized cap net position change chart. Source: Glassnode

As illustrated in the chart, BTC's realized cap net position change has dropped from 12.5% to under 5% since November 2024. This implies that the amount of BTC moved at prices above $100,000 is relatively less than in early December 2024. Similarly, the data analytics platform reported:

“Net realized profit-taking peaked at $4.5B in Dec 2024, and is now down to $316.7M (-93%). This reduction in sell-side pressure suggests the market is resetting to a state of supply-demand balance.” Bitcoin Price Probably ‘Chops’ in $100K–$110K Range Until FOMC Meeting_3

Bitcoin Price Probably ‘Chops’ in $100K–$110K Range Until FOMC Meeting_3

Bitcoin weekly analysis. Source: Bitcoindata21

The above data shows that liquidity remains thin in the Bitcoin markets. Despite these concerns, Bitcoindata21 said the total crypto market cap would “double” in six to eight weeks. Based on a weekly technical analysis, the analyst mentioned that “$150K for Bitcoin” is still possible, saying:

“Weekly RSI bouncing from bottom of trend channel, just like March 2017 and September 2020 (see red circles). As long as we stay inside the channel, the bull market is not over.”

Source: Cointelegraph

Risk Warnings and Disclaimers

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Owen Li

Commodity

Citing trading sources, Bloomberg reported that the effect of the sanctions in crude oil prices in Asia has been so pronounced that in some cases it has pushed refining margins below zero. Most of the refiners affected by the ripple effect of the sanctions were in South Korea, Singapore, and Taiwan, the report noted, and normally buy Saudi crude, which is priced against benchmarks such as Oman, which is currently soaring amid the replacement rush.

In the latest sanction package, reported to be the harshest yet, the Treasury of the outgoing Biden administration imposed sanctions on Gazprom Neft and Surgutneftegaz, as well as on 183 tankers, many of them in the so-called shadow fleet Russia uses to ship its oil abroad without having to use Western vessels or insurance.

“The new Russian sanctions from the outgoing administration are a net addition to at-risk supply, adding more uncertainty to the (first quarter) outlook,” RBC Capital Markets said in a note at the time. Other forecasters warned of a further supply tightening in an already tight market, mostly because of the tanker sanctions. Following the release of the package, oil prices rose to highs not seen in months.

The sanctions will be most painful for India, analysts warned, as the country depends on imports for over 80% of its oil consumption and was the biggest beneficiary of affordable Russian crude, a lot of which has now become unavailable. According to Kpler, 75 of the sanctioned tankers were used to transport crude oil from Russia to India.

“Most of these barrels went to Indian refiners and, hence, the impact will likely be largest there,” BNP Paribas senior commodity strategist Aldo Spanier told CNBC earlier this month.

Source:oil price

Risk Warnings and Disclaimers

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Owen Li

Economic

Forex

This suggests the job market is gradually cooling, with expectations for wage growth now below 4%, according to the BoE’s recent survey. The data does not significantly change the outlook for the BoE, with a February interest rate cut still anticipated. In the short term, EURGBP may see upward movement as markets continue to factor in potential BoE easing and risks tied to the UK’s higher borrowing rates. At the same time, the euro could benefit from reduced fears of EU-targeted trade tariffs.

EUR/GBP – D1 Timeframe

EUR/GBP on the daily timeframe chart has just bounced off the pivot area right after a liquidity sweep from the previous high. However, this is not expressly clear enough to build a proper sentiment, hence the need for a lower timeframe POV of the price action.

EUR/GBP – H3 Timeframe

The trendline break and retest is a critical price action pattern for confirming a reversal. As seen on the 3-hour timeframe chart of EURGBP, we see that the reaction from the daily timeframe pivot region has now gone ahead and broken below the trendline support, holding prices up. In this light, a retest of the trendline often signifies the onset of a reversal – thus confirming the bearish sentiment in this case.

Analyst’s Expectations:

Direction: Bearish

Target: 0.84983

Invalidation: 0.83065

Source: ACTIONFOREX

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Risk Warnings and Disclaimers

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Warren Takunda

Economic

The dollar traded in narrow ranges against major peers on Thursday, as the currency continued to struggle for direction in the absence of concrete announcements on tariffs from U.S. President Donald Trump.

A spate of central bank policy decisions are also due over the next week, with the Bank of Japan widely expected to raise interest rates at the end of a two-day meeting on Friday.

Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for Wednesday and Thursday of next week, respectively.

The dollar index - which measures the currency versus six top rivals, including the euro and yen - was flat at 108.31 as of 0551 GMT, following two days of gains of around 0.1%.

On Monday, it tumbled 1.2%, its steepest one-day slide since November 2023, as Trump's first day in office brought a barrage of executive orders, but none on tariffs.

So far this week, Trump has mooted levies of around 25% on Canada and Mexico and 10% on China from Feb. 1. He also promised duties on European imports, without giving details.

"President Trump has so far taken a less hostile-than-expected approach to China," amid overall "softer-than-expected policies and tone on tariffs", said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

At the same time, "we are cautious (that) risk sentiment remains fragile and can quickly turn sour if President Trump strikes a more aggressive tone."

Trump on Monday signed a broad trade memorandum, ordering federal agencies to complete comprehensive reviews of a range of trade issues by April 1, which many market participants believe will be a key date in revealing tariff plans.

Wall Street's main indexes rose Wednesday, with the S&P 500 hitting an intraday record high thanks to strong Netflix earnings and a rally in tech shares.

"With Trump now in the Oval Office, tariffs remain top of the U.S. government's priorities, even if they are not imposed on his first day as president," DBS analysts wrote in a research note.

"At next week's FOMC meeting, the Fed could affirm a longer journey towards achieving the 2% inflation target due to Trump's incoming policies on tariffs and immigration."

The Chinese yuan was little changed at 7.2816 per dollar in offshore trading .

Japan's yen edged down about 0.1% to 156.69 with markets pricing 96% odds of a quarter-point hike on Friday.

The euro was little changed at $1.0406. The ECB is widely expected to cut rates by a quarter point next week.

The Canadian dollar held steady at C$1.4389 against the greenback. The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.

The Mexican peso was little changed at 20.49 versus the U.S. currency.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Owen Li

Economic

US President Donald Trump’s tariff rhetoric is having a diminishing effect on markets, as traders shift their attention back to fundamental and intermarket dynamics. The first significant market reaction to tariffs is likely to come only after actual implementation, with the initial measures on Canada, Mexico, and China anticipated on February 1.

A key intermarket factor aiding Dollar’s stability is recovery in US Treasury yields, which is providing some support. However, upside momentum of the greenback is clearly capped by strong risk-on sentiment in equity markets. In particular, S&P 500, currently hovering just inch below its all-time high of 6099.97, is showing robust upward momentum. Decisive break above this level would confirm the resumption of the index’s long term up trend, with upper channel resistance (now at around 6380) as next target.

Dollar Recovery Capped by Stocks Rally, S&P 500 Ready for New Record_1

For the week so far, Japanese Yen is the weakest performer as markets look past BoJ’s expected rate hike on Friday. Dollar follows as the second worst performer, trailed Loonie. In contrast, Kiwi is still leading gains, despite expectations of another 50bps RBNZ rate cut after inflation data. Euro is supported by ECB officials’ reassurances of gradual easing, making it the second-best performer. Aussie Australian Dollar comes in third strongest, with Sterling and Swiss Franc positioned in the middle of the pack.

ECB’s Lagarde highlights regular, gradual rate cuts as policy diverges from Fed

ECB President Christine Lagarde emphasized the central bank’s commitment to a “regular, gradual path” of monetary easing, citing progress in disinflation across the Eurozone.

Speaking to CNBC, Lagarde reiterated that the pace of rate cuts will depend on incoming data. Meanwhile, she described the neutral rate — where monetary policy neither stimulates nor restricts the economy — as between 1.75% and 2.25%.

Lagarde also acknowledged the divergence in monetary policy paths between ECB and Fed. She attributed this gap to differing economic circumstances, noting that the two central banks “did not reduce rates at the same pace.” Markets, she said, are pricing in “vastly different monetary policy moves” over the next few months, reflecting these fundamental differences.

On external risks, Lagarde played down concerns about inflation being exported to Europe from the US, suggesting that any reigniting of U.S. inflation would primarily impact the U.S. economy. She added, “We are not overly concerned by the export of inflation to Europe.” However, she acknowledged potential spillover effects through the exchange rate, which “may have consequences.”

SNB’s Schlegel: Negative rates remain a tool, despite being unpopular

SNB Chair Martin Schlegel said today at the World Economic Forum in Davos that with the policy rate currently at 0.50%, “we still have some room” for adjustments. But he ruled out any firm commitment on future rate moves.

While negative rates remain an unpopular tool in Switzerland, Schlegel noted that the SNB would reintroduce them if deemed necessary to stabilize monetary conditions.

Looking ahead to the SNB’s next policy meeting in March, Schlegel indicated that the central bank will evaluate whether further rate adjustments are warranted.

“At the moment monetary conditions are appropriate. We decide from quarter to quarter and then we will see,” he said, refraining from estimating the likelihood of rates turning negative again.

Schlegel also addressed risks stemming from global uncertainties, particularly the tariff hikes proposed by Trump administration. While he downplayed the direct impact of such measures on Swiss inflation, he acknowledged that heightened global risks could bolster the safe-haven appeal of the Swiss Franc.

“Whenever there is a crisis, investors tend to buy the Swiss Franc,” Schlegel said, highlighting the currency’s role in monetary conditions alongside interest rates.

New Zealand CPI unchanged at 2.2% yoy, non-tradeable pressures persist

New Zealand’s CPI rose 0.5% qoq in Q4 2024, in line with expectations, as tradeable inflation increased 0.3% qoq and non-tradeable inflation rose 0.7% qoq. Annually, CPI was unchanged at 2.2% yoy, slightly exceeding the anticipated 2.1% yoy. This marks the second consecutive quarter that inflation has stayed within RBNZ’s target range of 1% to 3%.

The data highlights diverging trends within inflation components. Non-tradeable inflation, which reflects domestic demand and supply conditions and excludes foreign competition, stood at 4.5% yoy, highlighting persistent internal price pressures. Tradeable inflation, influenced by global factors, recorded a -1.1% yoy decline.

Rent prices were the largest contributor to the annual CPI increase, rising 4.2% and accounting for nearly 20% of the overall 2.2% gain. Lower petrol prices, down -9.2% yoy, offset some of the upward momentum, with CPI excluding petrol increasing 2.7% yoy.

Australia’s Westpac Leading Index falls to 0.25%, signals gradual growth pickup

Westpac Leading Index for Australia dipped slightly in December, moving from 0.33% to 0.25%. Westpac noted that while the growth signal remains modest, it reflects a marked improvement from the consistently negative and below-trend readings observed over the past two years. This uptick hints at a gradual lift in economic momentum through the first half of 2025.

Westpac forecasts GDP growth to improve steadily over the course of 2025, projecting a year-end expansion of 2.2%—a notable recovery from the weak 0.8% growth recorded in the year to September 2024. However, the bank noted that while this represents progress, it remains below the economy’s long-term potential.

Westpac highlighted that recent improvements in the Leading Index coincide with mixed signals on broader economy. A key concern for RBA is the labor market, where the “rebalancing” stalled in H2 2024.

“A further slowdown in underlying measures of inflation could still see the Bank ease in February or April but we suspect the RBA will need to be more comfortable about some of these risks before it is prepared to begin easing,” Westpac noted.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9032; (P) 0.9077; (R1) 0.9102; More…

Intraday bias in USD/CHF stays neutral for now, as the pair is in mild recovery. Price actions from 0.9200 are seen as a near term corrective pattern only. Further rally is expected with 0.9007 support intact. On the upside, decisive break of 0.9223 will carry larger bullish implications. However, break of 0.9007 will turn bias back to the downside for deeper pull back to 55 D EMA (now at 0.8950).

Dollar Recovery Capped by Stocks Rally, S&P 500 Ready for New Record_2

In the bigger picture, as long as 0.9223 resistance holds, price actions from 0.8332 (2023 low) are seen as a medium term corrective pattern. That is, long term down trend is in favor to resume through 0.8332 at a later stage. However, sustained break of 0.9223 will be an important sign of bullish trend reversal.

Source：Actionforex

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

US President Trump continued to deliver tariff threats on the second day after he took office. In an event at the White House on Tuesday, he indicated he was considering a 10% tariff on China, adding that the US also has a trade deficit with the European Union.

"We're talking about a tariff of 10% on China, based on the fact that they're sending fentanyl to Mexico and Canada", he said.

"Other countries are big abusers also, you know it's not just China." he added. "We have a $350bn [€414bn] deficit with the European Union. They treat us very very badly, so they're going to be in for tariffs."

The statement came one day after he indicated that he would impose 25% tariffs on Canada and Mexico. However, all these declarations have thus far been verbal rather than formalised through executive orders. His administration has instead initiated a review of US trade relations with other countries, set to conclude by 1 April, providing a window for negotiation.

Trump aims fire at Russia as he aims to halt war

In addition, President Trump has threatened Russia with sanctions and tariffs, seemingly aiming to get a peace talk underway.

"If we don't make a 'deal', and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries,"Trump wrote on Truth Social.

In Europe, German Chancellor Olaf Scholz and French President Emmanuel Macron met in Paris calling for unity to strengthen the European Union and enhance its competitiveness in light of Trump’s tariff threats.

Meanwhile, the European Central Bank President Christian Lagarde urged to prepare for potential US trade policy shifts at the World Economic Forum in Davos. She also indicated that inflation in the EU is on track to meet the ECB's 2% target, suggesting a further rate cut next week and more for the remainder of the year.

European markets look beyond Trump's tariffs

The European stock markets looked beyond Trump's tariff calls, continuing their bullish trends. The Euro Stoxx 600 index reached a new high and Germany's DAX rose for the seventh consecutive session to a fresh record.

The CAC 40 also climbed for the sixth consecutive trading day to the highest since June, fully recovering the losses triggered by Emmanuel Macron's call for a snap election last year. The FTSE 100 was flat on Wednesday but remained at an all-time high.

Luxury goods set to gain from Chinese New Year

European luxury goods stocks led the broad gains on the optimism that Trump did not impose the pledged tariffs immediately following his inauguration. Positive company earnings also fuelled the sector's rally. The upcoming Chinese New Year is expected to bring a shopping spree, potentially further buoying the European stock markets.

The euro held steady against the US dollar, hovering around a one-month high of 1.04. However, Trump's stance on tariffs may continue to support a strong dollar.

"Despite these moves, I remain a firm believer in the dollar bull case, with the'‘US exceptionalism' narrative remaining a strong one, and with the FOMC continuing to adopt a considerably more hawkish stance than that of their G10 peers", Michael Brown, a senior research strategist at Pepperstone London, wrote in a note.

"All-in-all, the net result is considerably greater uncertainty, thus leading to considerably higher cross-asset volatility", he explained, referring to uncertainties caused by President Trump's unpredictable policy decisions.