evening wrap, february 24

market vibes

Apart from a million dollar reward for Virginia Guthrie (it’s about time), USA Hockey and violence in Mexico… the NY session was typically ordinary on light volume. Therefore, until we hear from the President at 9 PM, there is an interesting development in oil that begs a more detailed analysis. After that and a few charts, we’ll call it a day.

“There's only one way to become a hitter. Go up to the plate and get mad. Get mad at yourself and mad at the pitcher.” Ted Williams

In the markets

WTI crude oil struggled to hold a rally today because the front of the curve literally crashed. This notable because as flat prices rallied from a low of $60.69 to a high of $67.05 + 11% for the month…The Q-2 3 month piece, April/July, fell from $1.45 to $0.55 or .62% in the same period. What does this mean?

I think it means the increase in flat prices is entirely specs going long on Iran and CTAs going long because their algos are reading the trend. But the front spread is pricing an excess of inventory over and above downstream sales of gasoline and other refined products in April. In short, we have more oil than we can sell downstream…. a lot more. Let that sink in.