Traders Look To What Comes Next
It’s a quiet start to Thursday trading with energy futures seeing very small losses and equity futures pointing to small gains. The markets seem to be breathing a sigh of relief after Wednesday’s inauguration went peacefully, and perhaps traders are also just pausing to see what might come next as the business of getting the next administration approved by Congress proceeds with the backdrop of a race between COVID treatments and new infections playing out around the world.
Nothing too surprising or groundbreaking from the list of executive orders signed on the first day of the new U.S. President’s administration. Energy did play a prominent role with orders that will effectively halt the Keystone XL pipeline construction (again), ban oil & gas development on federal monument land, along with directions for agencies to “consider revising fuel economic and emissions standards.” From the markets’ lack of reaction, it seems like these announcements were all well telegraphed ahead of time, and there’s little substantial change that will impact the country’s supply near term.
You can read the API’s response to the executive orders here: https://www.hydrocarbonengineering.com/gas-processing/21012021/api-comments-on-biden-executive-orders/
Speaking of the API, their weekly inventory estimate was reported to show builds for oil and refined products last week with crude stocks of 2.5 million barrels, gasoline up 1.1 million and distillates up 800k. Those builds are getting some of the credit for the selling in energy markets this morning, but in fact this selloff started earlier Wednesday afternoon before the APIs were released, with most energy contracts giving up most of their early gains before settlement. That pullback is another sign that the upward momentum is waning, but at this point the charts are giving little input as to whether this is just a pause, or the start of a trend reversal.
The DOE’s weekly report won’t be out until Friday morning due to the MLK holiday and inauguration.