Rollercoaster Ride Continues For Energy And Stock Markets

The rollercoaster ride continues for energy and stock markets as one of the largest daily reversals in equity markets on record Thursday spilled over into oil and refined product markets overnight, only to see those gains wiped out this morning.

The post-Christmas bounce for both asset classes may very well set the stage for a longer-term recovery, although we’ll need to see buyers hang on for the last couple of trading days in 2018 to have a chance at sustaining this rally. The correlations between Equity and Oil prices have surged in the past two weeks, which has been typical whenever the “risk on-risk off” pattern of trading (also known as “fear trading”) is gripping markets.

The API was said to show a 6.9 million barrel build in US Oil inventories last week, a 3.7 million barrel build in gasoline, while diesel stocks declined by nearly 600,000 barrels. The report knocked some of the wind out of the afternoon equity-fueled rally, although it’s hard to say if that report influenced the overnight swings of more than $1 for crude and 3-4 cents for products. The DOE’s weekly report is due out at 11am Eastern today.

While gasoline prices have led the way lower for much of the 3-month sell-off, reaching their lowest since February 2016 during the Christmas-eve melt-down, diesel prices led the drop Thursday. Gulf Coast ULSD prices settled at $1.56/gallon, the first time since Hurricane Harvey we’ve seen wholesale diesel prices posted that low.

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