The Bears achieved a modest win in refined products on Monday even as Crude edged higher.
The Bulls’ confidence grew in the Fuel Markets on Thursday as demand fears softened in several areas and yet another problem appeared on the supply front.
Covid’s impact was felt again on Monday in the Fuel Markets. A series of disappointing economic data points from China helped continue the Bear’s recent success. Retail had its weakest showing of the year. The growth in industrial production was the slowest in 11 months. News is also disappointing in the US airline sector. Last week, Southwest Airlines alerted investors about weakness in Q3 bookings. This week, the TSA’s daily travel count shows Sunday’s 7-day average traveler count is down 3% over the prior week. In early July, traveler throughput had edged to over 85% of the same time frame in 2019. That number has now dipped to 78.5%. For Tuesday, watch for the release of US retail sales and business inventories in the morning and the API’s inventory stats late in the day.
The Bears held their ground in the Fuel Markets on Monday. China’s covid struggles are creating demand concerns in the world’s second largest fuel consuming market. As an example, seat capacity for Chinese travelers has dropped 32% thanks to new restrictions. Both Goldman Sachs and JPMorgan Chase lowered their growth forecasts for the Chinese economy. In the US, the TSA reported 2.8% fewer travelers week-over-week. While the reduction is in part due to schools reopening, the decrease is larger than during the same period in 2019. The Bulls were aided with a series of storms forming in the Atlantic with one particularly concerning to Florida. Tuesday’s trading will be guided by the dollar’s continued strength from Friday’s jobs report and by storm path updates.