Energy And Equity Markets In The US Are Taking Back Most Of Friday’s Heavy Losses

Energy and Equity markets in the US are taking back most of Friday’s heavy losses as buyers search for a floor after a week of heavy selling. The rally puts the risk of a technical breakdown in energy futures on hold for the time being, although many are warning that this rally in equities is nothing more than a dead cat bounce.

Gasoline prices were up 15 cents this morning, rendering the President’s potential plan to push a Federal Gasoline Tax holiday (which would save 18.4 cents a gallon) pretty much meaningless.

Other political possibilities to deal with the impossible supply puzzle include a ban on some refined product exports, and waiving some summertime anti-smog rules to allow more fuel to be produced. The export ban seems particularly challenging given the previous promises to support European countries in their attempt to wean themselves from Russian energy supplies.

Speaking of which, a note this morning is a good reminder that we haven’t seen the worst of the Russian oil supply decrease as the bans by European countries are just about to start, and the latest Russian warnings to Lithuania suggest the fallout from this war still may get worse before it gets better. 

While much has been made of the lack of refining capacity in the US, South America and Europe lately, a Bloomberg article today highlights the large amount of idle capacity in China as the country tightly controls the industry, and even perhaps may use the energy sword like Russia has to strengthen its position in any number of standoffs with the US.

The Dallas FED’s Texas Employment Forecast highlighted another strong month of job growth in the state in May, but also flashes signals of a slowdown ahead with its leading indicators dropping for a 2nd straight month.  (Charts Below)

Reminder that since there were no settlements for RBOB and ULSD futures Monday (and spot markets weren’t assessed) today’s price movements are from Friday’s settlement levels.

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