Market Movements, Military Might, and Halloween Treats: A Spooky Week for Oil, Stocks, and Storage Demand
While many were watching Notre Dame show its dominance over Navy and cover the spread, Israel also demonstrated its military might with a long awaited choreographed face painting counterattack and destruction of Iranian military targets while staying away from oil and nuclear infrastructure. The action was not unlike the gym bro who bench presses 315 lbs without a spotter, just so everyone knows that he can…. anytime he wants to do so. It’s likely this action had the quiet support of the US and its allies. Diplomats are hopeful that the bombing will be viewed as an equal and measured response by both sides, and lead to a cessation of any further international conflict in the region. The oil markets certainly felt the temperature drop, as the pin in the balloon sent prices spiraling down nearly 6 percent on Monday morning with WTI trading at $67.67 as the sun came up on the work week. Traders anticipating this price haircut may want to think about taking on some storage now, before the good stuff is gone. The Tank Tiger has seen a hike in demand inquiries over the past few weeks, which is unusual considering the prevailing backwardation in the market structure. The Tank Tiger has backtested data that shows that a change in storage demand is a leading indicator for commodity price weakness. Were we right again? We can show you the data.
The stock market, previously spooked by escalation of Middle East hostilities, also seemed to be pleased with this sigh of relief. But the real trick or treat will be happening this week, when we see earnings reports from Alphabet, Microsoft, Meta, Amazon and Apple when everyone is out on the sidewalks getting their candy. Almost forgotten in all of this, Halloween will also witness the release of the Fed’s favored PCE inflation gauge with expectations of a slight tick down a tenth to 2.6%. A big surprise increase in inflation would be Jason, Michael Myers and Freddy Krueger all rolled up in one for the market. Let’s hope not.
We hope that the trading dirty gang had a nice time in sunny Florida at the Argus Miami Energy Forum. The Tank Tiger has plenty of fuel oil storage to show you, if the Mojito and price haircut has you feeling froggy about taking on a physical position. On the renewables front, the capacity to produce biofuels increased 7% in the United States during 2023, reaching 24 billion gallons per year at the start of 2024, with a 44% increase in renewable diesel and other biofuels. However, the federal tax incentives that have stimulated transition to renewable and alternative fuels are set to expire on December 31, 2024. Boo! We’re always open to share our ideas with you. For those of you participating in spooky activities this week, enjoy your Kit Kats and Butterfingers. Remember that full size candy bars give you legendary status in the neighborhood.
