DJIA Hits All-Time High, Energy Futures Down

Outcome certainty from the US election came quicker than most expected and quickly reverberated through the markets yesterday with the DJIA hitting an all-time high, having its best day in the past 4.5 years. Energy futures traded down across the board yesterday and are just on the red side of flat again this morning, although not as dramatically, as traders await the latest policy announcement from the FOMC later today. According to CME's FedWatch tool, just about everyone expects a 25-point rate cut with a 99.3% probability based on fed funds futures.

The DOE reported builds in oil and refined products along with increased refinery runs across the board. Refineries are operating at or above average throughput levels across the country, but crude still managed to store a little over 2 million barrels due to exports dropping to their 2nd lowest level of the year. Diesel builds were largely a result of the sharp drop in demand outweighing another week of increased export activity. PADD 3 accounted for 85% of the increase as it clawed back to above average levels after spending the last several weeks running along the bottom end of its 5-year range. PADD 3 was the lone builder for gasoline, keeping overall stocks at a mild increase as imports dropped to levels not seen since the Covid lockdowns started. Charts from the DOE below.

Hurricane Rafael hit Cuba yesterday as a Category 3 storm, weakened over the island, and heads into the Gulf this morning as a Cat 2 hurricane. European and US models are closer to agreement on direction today but it doesn’t look to be a direct threat to US refineries regardless (for now) as it moves west, although there will likely be some supply disruptions as oil production platforms in the Gulf have already started shutting in preparation.