Energy Traders Taking No News As Good News

Energy traders are taking no news as good news in the US-China trade spat: it was all quiet on the eastern front to start the week, boosting some buying in the energy and equities markets yesterday. Prompt month RBOB and HO contracts settled about 75 points and 2 cents higher yesterday while WTI added over $1.

Recession fears have waned for now on news that banks around the world, specifically Germany which lead the headlines yesterday, are prepared to implement stimulus programs to battle a global slowdown in economic growth. Aside from news arising that other national banks intend to follow suit, investors will be looking to the Federal Reserve’s minutes due tomorrow afternoon, to see if the US will shift its monetary policy as well.

The EIA published a note yesterday that the US overtook Saudi Arabia as the world’s largest petroleum producer in 2018. With a 16% increase in petroleum and a 12% increase in natural gas production in 2018, the US set a new all-time high combined production record. With the world’s largest oil cartel cutting 2019 projected demand and anticipating a 2020 supply glut, production break-evens will likely enter the conversation again if the oil markets are due for global rebalancing.

Yesterday’s report of another drone attack on a Saudi oil and gas field is taking credit for prices leaning to the higher side of unchanged this morning. Damage from the attack, thought to be staged by the Yemeni Houthi rebels, was limited to the plant’s natural gas processing unit and likewise had limited impact on energy prices. Barring surprise headlines, prices will likely wait for tomorrow’s inventory data release by the DOE and the Fed minutes to take a firmer stance on futures prices.

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