Equities And Energy Futures Swing After A Weekend Of Bank Failures

March madness is back as a busy weekend for bankers has created whipsaw action in energy and equity futures. We’ve seen consecutive daily price swings greater than 14- cents/gallon for both RBOB and ULSD prices as markets around the world wonder if we’re in the early stages of a new banking crisis but compared to the daily trading ranges of a dollar/gallon or more we saw the 2nd week of March last year, it’s hard to get too excited about these latest swings. 

While you were watching The Oscars and/or basketball this weekend, the FED created a new $25 billion Bank Term Funding Program (BTFP) which will offer loans to banks and other financial institutions to “help assure banks have the ability to meet the needs of all their depositors.” A joint statement from the Treasury, FDIC, and FED officials said that all depositors of SVB – not just those insured by the FDIC – would be fully protected, while also highlighting that the agencies had been forced to step in to rescue another institution, Signature Bank of New York.

The announcements of new liquidity facilities were initially met with strong buying in equity futures Sunday evening, and energy contracts were going along for the ride. This morning however the mood has soured as bailout actions reminiscent of the 2008 financial crisis have done little to soothe nerves on edge that more fallout is coming. Those fears are sparking what could either be called a flight to safety as US treasury yields tumble by the most in 15 years, or to stupidity as crypto currencies are also rallying, even though they may be a key contributor into the failed banks in the first place. The next few weeks should be interesting to say the least.

Baker Hughes reported a net decline of 2 more oil rigs, bringing the total active rig count to a 9-month low. The Permian basin led the declines with 6 rigs taken offline on the week.

The CFTC is still working to get caught up on their weekly commitments of traders reports but showed that money managers had continued to bail out of energy contracts in the middle of February. ICE data shows that the large speculators stepped up purchases of Brent and Gasoil contracts last week, which they may now be regretting.

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