Demand Fears Outweighing Supply Concerns

Demand fears are outweighing supply concerns to start Tuesday’s session, as Monday’s early move higher has largely evaporated, and volumes begin to decrease ahead of the long holiday weekend.

The NYMEX will have futures trading both Thursday and Friday, but the cash markets will not be assessed so most US traders will be done for the week at some point Wednesday. Most rack prices posted Wednesday night will carry through the weekend – unless something wild happens Thursday or Friday.

It’s official: OPEC & friends formally agreed to extend their output cuts for 9 additional months (through March 2020) earlier today. The enthusiasm for these additional cuts ran out of steam midway through Monday’s session – as it really doesn’t change much in terms of global supply, and this decision had been foreshadowed for months – and the official announcement today seems to have fallen on deaf ears as prices continue their retreat.

Just when it looked like there was light at the end of the trade war tunnel: A day after markets surged due to the US/China truce, the US announced it was considering imposing new tariffs on goods from the European Union. Although there are no direct impacts on petroleum products, the concern of a demand slump is real given many EU countries are already struggling through a period of stagnant growth.

While gasoline prices have pushed to multi-month highs in the wake of the PES shutdown, and record setting demand estimates from the DOE, ethanol prices have been pulling back sharply along with corn prices as concerns over the 2019 crop seem to be dwindling.

CLICK HERE for a PDF of today's charts