Investors Flee To Find Safer Assets
The past 24 hours seem to have been a tipping point where the virus went from being a big news story to most, to something more tangible now that this March madness is actually impacting March Madness along with other major sporting and social events, not to mention one of the world’s most famous faces.
RBOB gasoline is leading the move lower, reaching a fresh four-year low at 97 cents/gallon overnight as expectations of increased work from home strategies may force sharp reductions in demand. ULSD and oil prices are also under heavy pressure, but have so far not come close to testing the lows from Sunday night.
RBOB contracts also had the largest relative speculative long position heading into this meltdown, so that means there was more room to fall as those funds exit their positions. On the flip side, the 80 cents/gallon drop in gasoline prices is a big boost to the pocketbook of many Americans, and the concerns over airlines could spark a surge in road-trip vacations, unlike the last major economic crisis when four dollar gasoline made stay-cations all the rage.
The DOE’s weekly report offered some sharp contrasts to the “more interesting” market news, with demand estimates for refined products pushing well above their normal levels for March, and stocks seeing another week of large reductions. Of course the bearish counterargument is those stats are a look back at what the situation was last week, and it’s the weeks to come that we’ll likely see the impact on demand.