US Stock Markets Had Their Best Day In 4 Months

After a choppy morning that saw ULSD prices give up nickel gains and turn negative, the bulls stepped back in and pushed all energy prices emphatically higher in afternoon trading.  Both gasoline and diesel futures ended with 6 cent gains, while oil contracts gained $2/barrel in what appears to have been a reaction to risk becoming in favor again as financial markets far and wide are acting like the FED is done raising rates.

US stock markets had their best day in 4 months, and the US Dollar dropped sharply as investors reacted to the FED chairs guarded statements following the FOMC announcement.  Even though the daily correlation between energy contracts and equities and currency markets has been weak lately, the timing of the moves suggests there was at least some spillover contributing to the big rally in an otherwise quiet news day for energy contracts.

Despite yesterday’s big gain, and some overnight buying that’s losing its momentum around 7:45 central, the bearish weekly trend lines are still intact, and continue to favor lower prices unless we see another rally of a nickel or more in products to break out of this pattern. 

Bad news is good news: The October payroll report showed 150,000 jobs were added during the month, and the prior 2 months were revised lower by 101,000 jobs, bringing the total growth to a much lower total than most published estimates, which adds fuel to the FED is finished fury and is continuing to put another bid under equity futures in the early going.  The official unemployment rate ticked up 1 tenth to 3.9% while the U-6 rate ticked up 2 tenths to 7.2%. 

But when will it actually produce gasoline and diesel? The Dangote refinery in Nigeria has been a big 650mb/day wildcard for the Atlantic refining basin over the past year. The plant was commissioned in May to give the outgoing President something to celebrate, even though it wasn’t operating. Last month there were reports that the facility had bought its first crude cargoes and today there are reports that the facility will source its own crude for test runs in December, but still, no one knows whether or not the plant is ready to actually make refined products yet. Along with the mysterious reality of the new Dos Bocas refinery in Mexico, there’s theoretically 1 million barrels per day of capacity that could come online just in time for US refiners not to need it, that could make 2024 look pretty bleak for margins.

Flint hills reported its 3rd upset of the week at its Corpus Christi west facility, after a leak was found in an isomerization unit. That facility has seemed to struggle to return to normal operations since a power outage knocked all of the local refineries offline a couple weeks back, but allocations in the major markets fed by those plants seem to be in decent shape so far.

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