Energy futures are sliding to start Wednesday’s session as falling equity prices, rising oil inventories and some bearish thoughts from the IEA have all combined to at put a temporary hold on the rally.

US stock markets snapped an 8 day winning streak Tuesday, as treasury yields reached their highest levels in 7 years, and the forward curve on rates reached their highest readings in more than a decade.  Similar to how the forward curve in energy markets can signal a tight or oversupplied market better than outright prices can, the treasury yield curve is seen as a barometer for the US economy, and this recent action has analysts warning that a recession may be looming.

The API was said to report a build in crude oil stocks of 4.85 million barrels last week, while gasoline stocks dropped 3.4 million barrels and diesel dropped 768 thousand.  The DOE’s weekly inventory report is due out at 9:30 central.  Ahead of that report, the EIA released a note showing how US Port limitations are increasing costs of US crude oil exports, and notes the ongoing race to improve the transportation infrastructure.

The IEA’s monthly oil market report held global supply estimates steady, but revised demand estimates modestly lower, citing the 75% increase in oil prices since June 2017.  The agency also cast doubts on the impact of the US pulling out of the Iran nuclear accord saying: “…there is understandable uncertainty about its potential impact on Iran’s oil exports, which are currently about 2.4 mb/d. There is a 180-day period for customers to adjust their purchasing strategies and it remains to be seen how waivers and other aspects of the sanctions will be implemented.”

There has not been any official announcement following last week’s White House meeting on the RFS, but the senatorial debate via various forms of media continues to rage on.   RIN values have returned to the levels we saw before the announcement as it remains unclear if real change is coming, or if this is the latest chapter in the renewable fuels’ version of the boy who cried wolf.

CLICK HERE for a PDF of today’s charts