In today’s briefing:
- US: Steady As She Shuts
- Beyond The Blue Chips: A Look At SGX’s iEdge Singapore Next 50
- The Geopolitical Floor: The Impact of the Gaza Conflict on Brent Crude Prices
- U.S. Tire Industry Navigates Growth, Tariffs, And Strategic Shifts In 2025
- Asia base oils supply outlook: Week of 6 October
- Oil futures: Crude steady as markets face conflicting signals
- Global base oils arb outlook: Week of 6 October
- Americas/EMEA base oils supply outlook: Week of 6 October
- Asia base oils demand outlook: Week of 6 October
- Americas/EMEA base oils demand outlook: Week of 6 October
US: Steady As She Shuts
- The US government shutdown causes vital economic data to go dark, leaving the Fed facing market pressure to blindly cut rates as priced, creating risks of policy error.
- Both parties see strategic value in prolonging the shutdown, risking disruption that lasts well beyond historical norms. But levels will rebound when it inevitably ends.
- In the interim, private surveys signal weakness, and this picture is unlikely to improve significantly enough to block cuts in 2025, but that won’t drive more Fed cuts in 2026.
Beyond The Blue Chips: A Look At SGX’s iEdge Singapore Next 50
- SGX iEdge has launched the SGX iEdge Singapore Next 50 indices to track the 50 largest and most liquid SGX Mainboard companies beyond the 30 companies featured in the Straits Times Index (STI).
The Next 50 index has the highest weighting in the Real Estate sector, comprising ~47% of the index by weight. Other meaningful sectors are Financials, Industrials, and Consumer.
- By utilizing the new index in conjunction with the Straits Times Index (STI), investors and asset managers can more effectively construct tactical asset allocation strategies that aim to enhance portfolio performance.
The Geopolitical Floor: The Impact of the Gaza Conflict on Brent Crude Prices
- The Gaza conflict introduces a geopolitical risk premium to Brent crude prices, counteracting bearish market fundamentals driven by oversupply and downward demand revisions.
- Immediate price movements, such as this summer following an escalation of conflict, demonstrate the market’s sensitivity to regional tensions and the integration of a risk premium.
- Ongoing indirect negotiations for a Gaza ceasefire and hostage release represent a potential turning point; a comprehensive resolution could diminish the geopolitical premium, allowing crude prices to adjust lower.
U.S. Tire Industry Navigates Growth, Tariffs, And Strategic Shifts In 2025
- U.S. tire shipments projected at a record 340.2 million units in 2025
- Dynamics shift, with Chinese tire imports falling and SE Asian imports rising
- Top players pursue expansion, innovation, and portfolio revamp
Asia base oils supply outlook: Week of 6 October
- Asia’s base oils price-premiums to gasoil recover amid lower crude oil prices.
- Firmer margins, and signs of crude prices mostly holding in lower range, curb pressure on refiners to adjust base oils output.
- Rise in Asia’s base oils supply coincides with more muted demand in China and southeast Asia and more complicated arbitrage to move heavy grades to India.
Oil futures: Crude steady as markets face conflicting signals
- Crude oil futures Tuesday were largely consolidating early-week gains after OPEC+ agreed to a production increase at the low end of expectations, although markets continued to face mixed signals.
- Front-month Dec25 ICE Brent futures were trading at $65.68/b (2006 BST) versus Monday’s settle of $65.47/b, while Nov25 NYMEX WTI was at $61.96/b against a previous close of $61.69/b.
- The producer group said on Sunday it would raise quotas by 137,000 bpd in November, a move SocGen described as “a sign that markets priced in an expectation of a greater hike and, perhaps more importantly, a growing consensus that spare capacity is quite limited.”
Global base oils arb outlook: Week of 6 October
- Global Group I brightstock prices stay unusually high relative to other grades.
- Brightstock price-strength helps to cushion impact of lower prices for lighter-grade base oils, supporting firm Group I base oils margins in markets like Europe.
- Firm Group I base oil margins incentivize refiners to maintain high output.
Americas/EMEA base oils supply outlook: Week of 6 October
- US Group II base oils prices edge up versus vacuum gasoil (VGO) as crude prices correct lower.
- Firm, rangebound base oils margins sustain incentive for refiners to maintain high output.
- High output in Oct 2025 would help to cushion impact of scheduled plant-maintenance.
Asia base oils demand outlook: Week of 6 October
- Asia’s base oils demand could ease amid expectations that supply is likely to rise from already-healthy levels.
- Signs of healthy inventory levels in China and southeast Asia curb further any urgency to buy.
- Reversal of crude oil prices back to their medium-term range erodes further any pressure on prices to rise in response to squeezed margins.
Americas/EMEA base oils demand outlook: Week of 6 October
- US base oils demand likely to stay muted.
- Buyers could cover more of any seasonal pick-up in demand at start of Q4 with unused stocks.
- Lack of weather-related supply disruptions in recent months likely leaves those stocks at higher-than-expected levels.
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