US Stock Markets Are Surging Wednesday Morning After GOP Victories in Both The Presidency and Senate

US Stock markets are surging Wednesday morning after GOP victories in both the Presidency and Senate. Energy markets meanwhile are seeing a different sort of red wave with futures down 2.5-3% after 5 straight days of gains.

Whether the selling in energy contracts is due to the strong dollar’s impact on commodities (even though that correlation has been weak this year) the expected growth in supply due to an industry-friendly regime (even though those impacts will not be felt for a minimum of 6 months) or simply traders unwinding positions now that the results are in is impossible to say. What is clear is that prices haven’t broken out of the longer term down trend on the weekly charts, leaving the complex susceptible to a larger sell-off as we approach year end.

The market for RINs seems particularly vulnerable to the regime change based on what we saw during the last Trump term (see chart below) with early trades down about 2 cents from where they left Tuesday.

While the RFS program, and perhaps the IRA and its CFPC all seem to be vulnerable under new management, Washington State voted to keep their Cap & Trade program, striking down a measure to repeal it by a wide margin.

The API reported draws in refined product inventories of just under 1 million barrels each last week, while crude oil stocks built by 3 million barrels. The DOE’s weekly report will be published at its normal time this morning, then will be delayed a day next week due to the Veterans Day holiday.

Valero reported unplanned flaring at its Wilmington CA refinery Tuesday afternoon, and basis values in LA have ticked modestly higher following that news.