evening wrap

market vibes

February 4 … )

“You only grow when you’re alone.” Paul Newman

Oil opened sharply lower and rallied this morning on a potpouri of news, tariffs, a foggy harbor in Houston, imminent Iranian sanctions and other noise for which I was unable to find sources. In the end WTI settled about .50 cents lower.

The front spead closed at the lowest in 5 weeks. This is a bearish tell.

The gasoline crack is improving because crude is relatively cheaper now. Marathon earnings beat expectations and Phillips rallied 4% on BBG reports that efiners are exporting more gasoline (Next chart).

This is Phillips, a major US refiner. Conoco looks the same. As you can see refiners have been struggling with a terrible bear market in cracks since March.

Gasoline exports are not a big thing for US refiners, usually about 1 mm bpd … nearly all of it going to Mexico. If crude goes lower, demand for products will firm up and margins will get better. This is good to keep in mind if you have oil equities in your portfolio and a good idea to focus on good names with strong refinery businesses if you plan to hold them for the long term.

Stats tomorrow. I’m expecting to see this gasoline report sharply higher.

Next up gold and silver are looking bullish. S&Ps are aging in their cage. Bitcoin disappointed… again. And a few words from that past about better days (haha) in the vibe.