Lackadaisical Buying Action Sees Quick Reversal

Yesterday’s somewhat lackadaisical buying action saw a quick reversal on news that India is going through a fresh round of lockdowns. New Delhi was shut down for the week following the highest daily death toll the country has seen, and even that might be an understatement. If the situation doesn’t improve we could see a big shock to oil demand from the world’s third largest consumer.

Weak equities markets and the API’s estimate of a slight build in crude oil inventories seem to be taking the credit for the continuation of yesterday’s selloff. American crude oil futures are leading the way lower this morning, showing a 2.5% loss in the prompt month; gas and diesel contracts are both down around 1.9%. The Department of Energy’s version of the inventory report is due out at its regular time today (10:30 EDT).

Discussions between the U.S. and Iran are reportedly progressing towards a resolution as President Rouhani claims talks are 60% complete. While some argue a successful return of Iran’s sanctioned oil could destabilize global energy markets, some hold that their barrels never really left.

Soybean oil and corn futures (one of the main price drivers behind biofuel and ethanol RINs respectively) hit new eight-year highs yesterday, touching levels not seen since 2013. While the RIN credit prices tracked strongly with their underlying commodity for the last couple of years, we might see a separation as international trading takes futures on a wild ride.

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