A contemplative start to the week across the investment suites is very much inspired by some of the dissension expressed by members of the US Federal Reserve. There was never going to be a doubt on how the new Trump pick, Stephen Miran, would lobby for acceleration in easing interest rates, but with Kansas City Fed Jeffrey Schmid voting for borrowing costs to be held steady, it is the first time an FOMC decision has been made more awkward by opposing views since 2019. In his post-decision press conference, Jerome Powell, the Fed Chair, referred to the disagreement within the Fed’s ranks which seemed to bolster his natural tendency to be cautious. He warned on how concerns regarding inflation ought not be ignored and then went on to outline on a similar 25-basis point cut in December not being a forgone conclusion. After all, with the US CPI running at or around 3 percent, it is a full 1 point higher than the Fed’s target. The raging stock market is not only backing itself on how tech companies will continue to deliver but also betting on how the make up of the Fed will change at the end of Powell’s tenure and others of similar monetary persuasion. However, despite the derision seen in some quarters, Powell’s approach seems only sensible given the ongoing US government shutdown. It is possibly the only time an interest rate decision has been made without a full month’s worth of data being available for perusal. Without data such as Non-Farm Payrolls this week, much will be made of the private ADP Employment number as analysts and central bankers scramble in a data black hole. In the absence of hard numbers, there might be even more caution mouthed from the Fed and the renaissance of the US Dollar elongated. While the super bulls of the stock markets might be able to ignore the US Dollar Index punching through 100.00 for the first time since June and August, other trading mediums will not.

There is no Glasnost in oil

As is the case when addressing the fortunes of stock markets, success or failure does at present seem to orbit around one issue. In the sphere of global bourses it is everything to do with A.I. and the companies associated with either coding it or building the machinery to make it whir. As for our market, we have boxed ourselves into the singularity of Russia and our fortunes seem to be completely pegged on how, what, where and when it manages to get oil or gas to those customers who only pay slight heed to international pressure or sanction. There are of course, medium and longer-term puzzles for us to fit together, but none have the immediacy of attention or the ability to turn the market bullish or bearish in an instant. Curiously, and in a meta-consideration, it is tempting to think that because of this narrowing in options of oil price influence, the Russia question is at inflection point. But again, is that to do with a lack of alternatives or how the sanction situation became much more difficult to ignore because of the US targeting of Lukoil and Rosneft? Does such an unforeseen aggressive move by the US give more cause to fear for the wellbeing of assets priced in US Dollars for Russian oil customers? Türkiye and India are amending their ways, but at present their lining up of other supply suggests a ‘just in case’ optionality rather than a hard switch. As for China, it is left to our community that normally drips with the binaries of ‘higher or lower’ to assess which is the most precious, the US need for rare earths or Beijing’s energy security and whether either could lead to a trade war, let alone a stymying of Russian oil flows.

There can be little doubt the one person who wished for a very low-level reading of things that make headlines, is Vladimir Putin. It would suit very nicely, thank you very much, if the Middle East were still humming with threat, or a succession of hurricanes were knocking off oil facilities in the Gulf of Mexico, or that the clock could fast forward to January and there was another repetition of the ‘Arctic blast’ of 2024, anything. However, unless China’s army decides to go for a ferry ride across the Taiwan Strait or, and with respect to Jamaicans and Cubans, a very quiet season manages to muster and send a tropical cyclone into Texas or Louisiana, ‘oily’ eyes are set in stare toward the largest country in the world. Instead, Moscow must now come up with another leg of delaying tactic. Speculatively, having worn out the hampering of ceasefire talks, the Kremlin will probably have to agree to meeting with Ukraine, and then go about finding fault with everything offered and walk away until faced with another exasperated threat from the US, again return to a shared table with counterparts from Kyiv for another act in this ‘play’ of, and for time.

In terms of the calendar, the cold weather seasonality does appear to have any pricing problem fix baked-in, as seen in the behaviour of cracks and backed up by how OPEC+ this weekend went ahead with the 137kbpd increase of oil supply in December, but demurred on replicating the same for the first three months of 2026 for fear of oversupply. Even that begs a question. Was part of the decision derived from how Russia might not have the ability to increase output due to the damage sustained from drone attacks on its oil infrastructure?

Yet, this is not a feedstock issue. Those that are in the business of oil alchemy are cock-a-hoop on current refinery margins, and how they can pick and choose from a vast array of competing crude grades. Yes, inventory is low, even in the base material, but note the recent reports on the increasing number of ships laden with crude that have yet been assigned a destination customer. Industrial demand has yet to reappear, and each manufacturing PMI comes complete with a subsection on the effects of tariffs. Yesterday, private PMI reports from both South Korea and China reported slowing export orders paying particular attention to diminished demand from the United States. The blame for which is placed firmly at the foot of tariffs and a lack of confidence in industrial sectors. This was completely echoed later in the day by another disappointing reading in the ISM manufacturing report that showed eight-straight months of contraction as orders shrank and lines of supply from overseas increased delivery times. There is no need to hold battalions of oil inventories, living hand-to-mouth at present appears to be the most cost-effective practice, until something happens. But the only game changing card in our deck of uncertainty is Chinese imports of Russian oil. Do any of us really know if or when it will be an ‘Ace’ or will it be just another ‘Joker?’

Overnight Pricing