evening wrap, april 22
market vibes
Trading in NY gave a decisive 2 thumbs up to the latest US strategy in the Strait of Hormuz on Wednesday. The blockade will remain in force ad infinitum or until such time as US terms are agreed. Stocks extended their ranges into the unknown blue sky of new all time highs and bullish conviction was palpable if not euphoric …yet.
An interesting news item on X today: Indonesia declared that it intends to toll vessels that transit the Strait of Malacca!
In other news a judge has declared unconstitutional a 49.5/50.5 Democrat victory redistricting Virginia to a 10/1 constituency (image below speaks for itself). If the vote were not immediately contested in the courts it would have given Democrats an additional 4 seats in the House which you know… more on that in the vibe.
more disconnects!
The EIA/DOE weekly petroleum report is a mandatory government survey with legal penalties for inaccurate or missing data. Today the DOE reported a build of 1.9 million barrels of crude oil to 465.7 million barrels (a hefty supply)… a draw of 4.6 million barrels of gasoline and a draw of 3.4 million barrels of all distillates for a total draw of 6 mm bbls of total fluids.
Yesterday the API, a voluntary survey of its subscription paying member companies (mostly larger integrated oil firms, refiners, and storage operators) reported a 14 mm bbl draw of all fluids. Both agencies reported lower inventories but the privately sourced API inventory data is 150% lower. I’m thinking about the CEO of Aramco saying global inventories at 5 year lows knowing full well they were at record highs. Truth and oil are like oil and water.
There has been a rash of refinery fires recently and considering the hostilities the implication is sabotage. Fwiw refinery fires and outages are common but not as common as we’ve seen globally in recent weeks.
The disconnect is this news is NOT a bullish narrative for oil. Actually refineries are the primary buyers of crude oil and if arsonists are doing it they are cutting demand for crude.
in the markets
Technically, June WTI rallied on the lightest volume since April 6 (1st Iran deadline “D-Day”) and the lowest since February 25. Open interest fell to the lowest since January 23. The range is balanced by record high and extremely low volume at highs and lows during the war sample… And it is powerful enough to discount just about every possible outcome except one. Door# 4 in the vibe.
