Market Fluctuations Caused By Uncertainty With Tariff Policies

Whiplash is the theme of February trading so far as markets react to a great deal of changing uncertainty on tariffs and political pontification. Monday’s action was highlighted by double digit gains that were later wiped out when the tariff threats were put on hold for a month. Tuesday’s session featured a heavy selloff that was erased after the U.S. President announced his plan to exert maximum pressure on Iran – specifically targeting a reduction in their oil exports which have ramped up over the past several years as sanction enforcement has waned.

Tuesday evening’s suggestion that Gaza should be turned into condos was met with criticism by the world’s swing producer of oil Saudi Arabia which will no doubt play into the inevitable negotiations on the kingdom’s output cuts.

While the unpredictable nature of the Executive orders is certainly keeping markets around the world on their toes, it seems likely that we’ll see a similar pattern play out as we did during the last term for this administration where each tweet storm is met with diminishing reaction from the market as the shock effect wears off and the reality of the legal limitations on executive orders starts to sink in.

Wednesday’s session is starting off on a modestly weaker note, with crude and refined product futures all down around 1%.

The API estimate yesterday showed large builds for crude oil and gasoline stocks of more than 5 million barrels each, while distillates saw a large drop last week of nearly 7 million barrels. The DOE’s weekly report is due out at its normal time this morning. This morning the EIA highlighted how it took an “all of the above” approach to heat New England states during the January cold snap, which is part of why diesel inventories have seen healthy draws of late.

West Coast basis values have continued to move higher this week as the combination of multiple refinery issues and the spring RVP transition are both limiting supplies, while the parade of “atmospheric rivers” is doing its part to keep a lid on demand.

Marathon reported another unplanned upset at the Wilmington segment of its LA-area refining complex, the largest remaining facility in the region. That’s the 5th unplanned event reported so far in the new year for that refinery, adding to a week’s worth of planned maintenance that has limited supplies.

Contra Costa officials finally gave the all-clear on the public health advisory, 4 days after PBF’s Martinez CA refinery caught fire. Investigations are still underway but several reports by ENT suggest repairs are likely to take months on the impacted hydrotreating unit, which may keep that facility from reaching capacity this summer.

Exxon reported an electrical failure in an FCC unit at its Beaumont TX refinery overnight. The event only lasted 30 minutes however, suggesting that operations weren’t materially impacted.