Results

Reality bit the Bulls on Thursday in the Fuels markets. Much of the recent run up has focused on the upcoming busy “driving season”. The thought was drivers would bust through their protective Covid bubbles, hop in a car, and burn some gasoline. The EIA’s Wednesday report cast doubts on those assertions with weak imputed demand. India’s ongoing Covid struggles keeps the Bulls from running completely rampant. The EIA data created additional misgivings. Friday’s attention will be on the US’ April non-farm payroll report and unemployment released at 8:30 am EDT.

The Bears won the battle on Wednesday in the Fuels market despite significant declines in product inventories. Estimates called for a 4MM barrel decline in Crude. The actual decline was 8 MM barrels. Gasoline inventories were on the mark with a 700K barrel increase. Like Crude, Distillates had a larger than expected decline of 2.9MM barrels versus expectations of a 1.6MM barrel decline. The recent push by the Bulls coupled with inventory declines could invite additional production by OPEC+. So, while the Bulls won Wednesday’s headlines, the Bears won the trading day.

The Bulls ruled on Thursday in the Fuels markets as optimism abounded for the third day in a row. The US Gross Domestic Product grew an annualized 6.4% in the first quarter. US weekly jobless claims declined to their lowest level since March 2020. The only negative was from Ford’s earnings release. A shortage of computer chips means a shortage of new vehicles. This will impact rental car agencies who sold off car inventory during the pandemic. Their inability to replenish new vehicles will leave the summer driving season with limited vehicle options for travelers to drive.

Wednesday was day two of a beatdown by the Bulls in the Fuels market. The EIA released their inventory stats where Crude and Gasoline were reasonably close to consensus expectations. However, Distillates showed a 3.3 MM barrel decline which was materially larger than analysts had predicted, and implied US demand for Gasoline was very strong in the EIA’s numbers. Elsewhere, the US Federal Reserve held interest rates at near zero while warning of potential inflation. The threat of inflation lures traders into the commodities arena lending aid to the bulls.

What started as a promising day for the Bears ended with mixed results on Monday in the Fuels markets. Early trading focused on India with daily infection records and shortages in medical oxygen. The Bulls won the day in Crude and Distillates after OPEC+ hinted a delay in scheduled output hikes. Travel stocks gained momentum after an EU official said they may allow vaccinated Americans to travel to Europe. Covid ravaged the travel sector. Any improvement there would be bullish for Fuels markets.