"Get-Out" Trading Goes For A Clean Sweep

The “Get Out” trading is going for a clean sweep this week with equity and energy markets both trading in the red for another day. At this point, it looks like this will be the biggest weekly sell-off since the financial crisis in 2008 with just about anything besides U.S. Treasuries, gold and RINs being thrown out the window as many around the world continue to panic over the potential fallout from the coronavirus.

Of course everyone wants to know how much lower can we go from here? For perspective, during crisis of 2008, we saw WTI drop from $147 in July to $32 in December. RBOB went from $3.63 to $.78 and ULSD dropped from $4.15 to $1.19 during that same stretch, making this latest panic sell-off look minor in comparison.

It’s hard to say if we will see anything close to that again (keep in mind we started from values half as high as they were then) but there certainly could be much more selling to come as long as fear is driving the bus. The next natural stopping points I see on the charts are the $42 range for WTI and $1.24 for RBOB (lows from Dec 2018) $1.35 for ULSD (low from summer of 2017).

It’s expiration day for March RBOB and ULSD futures, and with the increased volatility we’ve seen lately, don’t be surprised to see some wild swings as those contracts go off the board this afternoon. Most cash markets around the country have already transitioned to pricing off of the April contracts, so those swings (if they happen) should not impact rack pricing tonight.

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