A Rise In COVID Cases Are Taking Credit For This Morning’s Heavy Selling Action

A rise in COVID cases across the pond are taking credit for this morning’s heavy selling action. While Austria going back into full lockdown might make for a catchier headline, the consideration of a joint release of petroleum reserves by the US and China shouldn’t be slept on. The European crude oil benchmark is trading below the psychologically important $80 mark this morning, but it seems to be the refined product futures that are leading the complex lower. Both gasoline and diesel futures are down over 3% to start the day, equivalent to +$3 per barrel.

Gasoline futures are plowing through a slew of would-be technical support levels this morning, including its 5-, 10-, and 50-day moving averages before the market has officially opened for the day. While it no longer seems that last month’s rounding top chart pattern will end up coming to fruition, today’s action seems to solidify the bears’ control of this market. Lower short-term prices likely comes as welcome news to consumers who are expected to stay home next week rather than drive for turkey day.

The Environmental Protection Agency announced yesterday that the deadline for compliance according to the Renewable Fuel Standard for 2020 and 2021 has been delayed for all obligated parties, and gave small refineries more time to comply for 2019 obligations. Both ethanol and biodiesel credits traded lower on the news but the move pales in comparison to the volatile trading we’ve seen for the past year. (charts below)

While it’s still debated whether or not a release of stockpiled oil will have any long-term benefits, the seemingly bearish precedent of ‘more supply = lower prices’ may be enough to kick chart technical into the correction that’s been anticipated. Even if futures see a heavy selloff in the next couple months, that might not do any good for some metropolitan areas that are seeing record high fuel prices due to refinery outages.

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