Fuel Markets – On the Trapeze!

​Floating storage for crude and refined products has been dropping since April as markets recover. Roughly 30 million barrels of crude and 25 million barrels of oil products have been offloaded as demand has been recovering. Overall, oil prices had their best quarter in 30 years with WTI futures moving up 91% in Q2, but still down 34% since the beginning of 2020. Risks to oil prices to monitor for the balance of year – Presidential elections, Brexit, and COVID.
 
We’re still walking that high-wire, however. Market structure has also pushed traders to close out physical plays for storage as the carry in the market has narrowed making values less attractive to hold barrels as prices are closer to storage costs now. All refiners across the U.S. have shutdown, idled or lowered capacity by 30-40%, not to mention maintenance and other stoppages. We can expect some long lines at the rack this summer.
 
Johns Hopkins Coronavirus Resource Center has global reported cases at 10,538,577 (2,658,324 in US) as of today with deaths at 512,689 globally. Texas has become the epicenter for US outbreaks and caused the governor to roll back phased out reopenings. Arizona, California, and Florida are also pulling back as case numbers rise in these states as well. Fifteen other US states have slowed or backtracked on re-openings.
 
Unemployment remains a key factor for US economic recovery. Employment-population ratios (number of employed people as a percent of adult population) were at 61.2% in January were at 52.8% in May. June jobs report to be released this week will be a key indication if economy is recovering. Home prices were up in April, but recent data shows mortgage demand has fallen for the second straight week which may be a signal that the housing recovery is slowing. Consumer confidence numbers for June beat forecast coming in at 98.1 versus a forecast of 91.0 and up from May’s 85.9. European markets closed higher today on positive coronavirus vaccine news. China’s manufacturing activity beat June expectations.
 

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