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Election Day In The US

Tuesday, Nov 6 2018
Market Talk

It’s election day in the US and NYMEX futures are celebrating with a modest move higher this morning after reaching multi-month lows Monday and trading lower for most of the overnight session. If these gains can hold, it would snap a streak of 5-straight losing sessions for RBOB and WTI.

Brent Crude has not yet joined the US contracts in the move higher as the European grade is still digesting the unexpected reality that new waivers offered to buyers of Iranian crude may mean the global market will shift from shortage to excess in short order.

After announcing the waivers last week without providing details, the 8 countries that are getting a reprieve were named specifically Monday. China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey were all given an additional 180 days to purchase Iranian Oil. It’s important to note that those country’s account for the majority of Iranian Exports, meaning the sanctions may have minimal impact on oil supplies for the next 6 months.

It’s also worth noting that by naming Taiwan, the US is also sending a message to China that it is willing to move away from the long-held policy of not naming the disputed territory as a stand-alone nation, which could have consequences in the ongoing trade-tantrums.

The 6 month waivers also appear to be a cunning move as that will coincide with new infrastructure projects in the US to get more Permian Basin crude oil to the coast, and for more of the largest crude oil tankers to bring it to the global market.

While it’s unlikely that the mid-term election results will have much of a near-term impact on energy supplies nationwide, Colorado is voting today on a measure that could drastically reduce drilling activity in the state, which ranks as the 6th largest in oil and natural gas production.

Good news for Canadian Oil Producers, Western Canadian Select prices surged more than 10 percent in Monday’s trading. Bad news? WCS is still only $20/barrel.

CLICK HERE for a PDF of today's charts

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