In today’s briefing:
- UK Fiscal Slippage Rules
- Shining Silver Set To Go Parabolic Powered by Gold, Supply Deficit, & Weak Dollar
- [IO Fundamentals 2025/29] IO Recovery in Spotlight Amid China’s Infrastructure Drive
- [WTI Options Weekly 2025/29] WTI Retreats as Supply Worries and Bearish Sentiment Resurface
- Something Is Brewing…
- [Henry Hub Options Weekly 2025/29] Henry Hub Gained on Better Demand Despite Supply Concerns
- Trump & The US – Overweight Equities
- Americas/EMEA base oils supply outlook: Week of 21 July
- Global base oils margins outlook: Week of 21 July
- Americas/EMEA base oils demand outlook: Week of 21 July
UK Fiscal Slippage Rules
- The UK’s de facto fiscal rule is slippage, with a £50bn to £100bn increase in borrowing between initial official forecasts and outcomes. 2025-26 made another slippery start.
- Politicians spend any space in the OBR forecasts, skewing surprises to higher spending. Yet tax hikes keep failing to raise the hoped revenue, motivating further increases.
- Investors should not be fooled by forecasts for consolidation when the failed strategy driving the fiscal slippage rule survives. Issuance may stay near £300bn in 2029-30.
Shining Silver Set To Go Parabolic Powered by Gold, Supply Deficit, & Weak Dollar
- Silver (SILVER COMDTY) going parabolic. Why? Three reasons. Stratospheric Gold prices. Robust industrial demand amid supply constraints. Weaking dollar.
- Silver IV is spiking up. Especially, Up Var jumped 10.7% to 35.64 signalling rising bullish sentiments among options market makers.
- Silver is forecasted to have supply deficit seventh year in succession.
[IO Fundamentals 2025/29] IO Recovery in Spotlight Amid China’s Infrastructure Drive
- China’s mega hydropower project signals stronger infrastructure-led steel demand, offering a lifeline to mills and boosting near-term iron ore demand and prices amid weak property activity.
- Rio Tinto’s strong Q2 output boosts near-term iron ore momentum, but muted shipments, cyclone impact, and gradual Simandou ramp-up may limit upside in prices.
- Portside iron ore inventory data showed mixed signals last week, with SMM reporting a sharp drop while CISA data reflected a slight increase.
[WTI Options Weekly 2025/29] WTI Retreats as Supply Worries and Bearish Sentiment Resurface
- WTI futures dropped by 3.5% for the week ending 18/Jul, marking its first fall in three weeks. The downtrend was driven by fears over oversupply and weak demand.
- The U.S. rig count rose by seven to 544, led by a rise in gas rigs. Oil rigs dropped for the twelfth straight week, down by two to 422.
- WTI OI PCR rose to 0.96 on 18/Jul compared to 0.91 on 11/Jul. Call OI fell by 22.8% WoW, while put OI dropped by 18.4%.
Something Is Brewing…
- The Abrdn Commodity Index is putting in a textbook head and shoulders consolidation pattern.
- These chart patterns with a large base have the tendency to build the fundament for big breakouts. Something is brewing from a technical perspective here…
- The ETF is tracking the Bloomberg Commodity Index Total Return (BCOM).
[Henry Hub Options Weekly 2025/29] Henry Hub Gained on Better Demand Despite Supply Concerns
- For the week ending 18/Jul, Henry Hub rebounded by 7.6% on the back of warm weather forecasts and rising gas flows to LNG export terminals.
- For the week ending 11/Jul, the EIA reported that U.S. natural gas inventories rose by 46 Bcf, higher than analyst expectations of a 44 Bcf build.
- Henry Hub OI PCR remained unchanged at 0.87 on 18/Jul compared to 11/Jul. Call OI grew by 3.1% WoW, while put OI increased by 3.3%.
Trump & The US – Overweight Equities
- Overweight US equities. Government debt issuance is rising, investors switching from bonds to equities and foreign US bond investor appetite waning.
- Trump’s One Big Beautiful Bill is classic demand side fiscal stimulus, benefiting consumers.
- The 12–18-month outlook for domestic demand and corporate earnings growth has improved – reinforcing what business cycle indicators were already signalling.
Americas/EMEA base oils supply outlook: Week of 21 July
- US Group II base oils price-premium to feedstock/competing fuel prices stays in narrow range, increasingly lags year-earlier levels.
- Base oils margins hold at levels that sustain incentive to maintain steady output.
- Base oils prices hold at levels that facilitate removal of surplus supplies in overseas markets.
Global base oils margins outlook: Week of 21 July
- Global base oils prices face more pressure versus feedstock/competing fuel prices, especially for light grades, and especially in Asia.
- Heavy-grade price-premium to feedstock/competing fuel prices also faces more pressure in Asia than in other markets.
- Dynamic increases prospect of any adjustments in output taking place in Asia ahead of other markets.
Americas/EMEA base oils demand outlook: Week of 21 July
- US base oils demand likely to wane amid seasonal slowdown in consumption during summer holidays.
- Steady outright prices and expectations of healthy availability of supply add to attraction of holding back.
- Build-up of additional stocks to cover against weather-related supply disruptions likely to have mostly been completed.
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