The S&P gave us exactly what we talked about yesterday, a constructive session with buying interest. The Russell 2000 has quietly been a leader for much of the post-correction trade and yesterday it set a new all-time high.
Crude oil prices dipped as trade war fears went away after a private report that appears to indicate that oil supplies may see a big increase this week. Genscape, the widely followed energy market data and intelligence company, reported that oil supply in Cushing, Okla., was up 2.18 million barrels last week. The increase and the fact that some of the Geo-Political concerns did not actually blow up into a supply disruption over the weekend led to a correction in the price of crude.
Trade War? What trade war? The fears that President Donald Trump’s threats of tariffs would plunge the globe into a devastating trade war is easing quite a bit. The Wall Street Journal reported that “'China and the U.S. have quietly started negotiating to improve U.S. access to Chinese markets, after a week filled with harsh words from both sides over Washington’s threat to use tariffs to address trade imbalances,' people with knowledge of the matter said."
You can talk all you want about rising U.S. oil production, but the fact is that U.S. crude oil supply is below average. The Energy Information Agency, in its weekly report, said that U.S. commercial crude oil inventories fell by 2.6 million barrels to 428.3 million barrels, which the EIA says are the lower half of the average range for this time of year. This is happening even as U.S. oil production reportedly increased to 10.047 million barrels of oil a day.
Quant Cycles (formerly called the Cycle Projection Oscillator) is a technical tool that uses proprietary statistical techniques and complex algorithms to filter multiple cycles from historical data, combines them to obtain cyclical information from price data and then gives a graphical representation of their productive behavior. Other proprietary frequency domain techniques then are employed to obtain the cycles embedded in the price.
Springtime seasonal in crude oil is being fed by a multitude of factors. Record gasoline demand, falling Venezuelan production, rising tensions between Iran, Saudi Arabia and the rest of the world is underpinning oil and oil product prices today. President Donald Trump is meeting with Saudi Crown Prince Mohammed Bin Salman and the market is assuming that means that the United States and Saudi Arabia will take a tougher stance against Iran.
March madness started early in crude oil as prices fell on relatively light volume and focused on bearish news about ignoring bullish news at its own peril. Traders sold oil off on a report that showed an increase in supply in Cushing, Okla., but it is about time. The Nymex Storage hub has seen supply fall at a record pace in recent weeks, and seeing that we are deep into refinery maintenance we should start to see the supply recover.
It’s "sunshine on the shoulder" season as U.S. refineries slow runs to 87.8% of capacity, running just 15.9 million barrels, the lowest level of the year as seasonal maintenance flips into high gear. The trade seemed disappointed that the overall 3-million-barrel build in crude oil supply was higher than expected. That is what should you expect when seasonal maintenance is happening.