Four straight days of selling for energy and equity markets this week suggest that fear is making a comeback in the global marketplace. This time around it seems to be tariff talk sparking concerns over a trade war that’s spooking investors. While the headlines are focused largely on steel, there’s no doubt that oil & its products could be directly impacted, and that the country’s position has changed drastically in the past few years as it transitions from the world’s great importer to a key exporter of energy.
As we saw during the February Flop, when the fear trade is on, the price movement for futures can be summed up as either “risk on” or “risk off” with fundamentals taking a back seat. The key levels to watch over the next several sessions will be those February lows that helped prices bounce 10% before the latest round of selling. If those levels break, charts suggest WTI may take a run at $55, which may push refined products to the low $1.70s before the next support layers come into play.
The 2nd meeting this week at the White House to discuss changing the RFS with key stakeholders ended just like the 1st, with lots of talking and no agreement. The difference with Thursday’s meeting is that RIN values have dropped sharply in the wake of it, whereas they rallied following Tuesday’s session. Reports suggest that TX senator Ted Cruz was “content” with the meeting which may be working up traders to think that a portion of his plan to cap RIN values may be put into effect, perhaps in exchange for loosening rules on E15 blends to keep the Ag state senators happy.