Presidential Debate Expected To Be Potential Market Mover

Refined products are ticking modestly higher for a fourth straight session to start the week, but have still not erased the heavy losses we saw last Monday. There is still little in the way of market moving news directly impacting energy prices – which seems to be why we’re seeing very small trading ranges in the past week. U.S. equity markets are pointed sharply higher after dropping for a fourth straight week last week, as bargain hunters appear to be betting that the September correction has now run its course.

The presidential debate on Tuesday is expected to be a potential market mover for stocks, which could trickle down to energy markets as well.  

Already permitting in the Permian basin has surged in the past few months even as prices remain below break-even levels for new drilling projects, which many believe is to avoid a potential ban on hydraulic fracturing if Biden wins the election. 

Baker Hughes reported four more oil rigs were put to work last week, two in the Permian and two in the Eagle Ford shale plays, marking just the fourth weekly increase since the start of COVID. 

Money managers increased their net length in WTI, Brent and RBOB contracts last week, driven primarily by short covering, although WTI did see a healthy increase in new long positions as well. ULSD continues to be the least favored among the large speculative class of trader, with another increase in the net short position (betting on lower prices) last week. 

The latest refining casualty in a rapidly growing list: PREEM announced it was scrapping a $1.6 billion expansion at the Sweden’s largest refinery as the fallout from COVID made the project unviable economically.

An IEA report this morning highlights the growing role of carbon capture technologies in the race for clean energy. 

The Financial Times is reporting that Trafigura – one of the world’s largest oil traders – announced a $2 billion investment in renewable projects. The company is also planning to set targets to reduce emissions from its existing operations, saying “We are going to set targets that are achievable...but I am not going to commit to something in 2050 that I am not around to deliver,” he said. “We will commit to something we can deliver on.”

After a few days with no storm systems in the Atlantic, the NHC is giving low (30%) odds of development to a system off the Eastern coast of central America. While the peak of the season is in the rearview mirror, it’s still expected we’ll see a few more storms in this extremely busy season before it ends November 30. As a reminder, Sandy was a Halloween storm.

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