evening wrap, july 20
market vibes
a very brief checkdown tonight for obvious reasons
Monday was a bit of an anti-climax in NY. News was bullish in oil but a rally in Asia died on the NYMEX. Open interest is still falling indicating oil-risk is still running from oil apace. Stochs are trending higher and there is no technical sign the rally is failing despite long intra-day stop and start periods of low volume.
Javier Blas quotes this on X: “Morgan Stanley reckons that more than half of Russian oil refinery capacity is down due to Ukrainian attacks.” Imo, if Russia can’t refine its crude oil it will export it into the floating glut... Every time UKR hits a Russian refinery this chart goes higher and Europe (the source of funding for this idiotic war) will pay more for disty... meanwhile as crude goes down… the crack goes up.
Interest rates and the dollar were higher. Judging from the subtle erosion in OI and choppy indecisive trading I think a few spec longs have sold a small amount of length. DXY rallied with higher rates today.
But gold was unchanged and silver went up. In a nutshell more people are not selling gold and silver than people who don’t want to buy them. Weird but true.
Anecdotally some refiners say backlogs are beginning to clear and they could start accepting limited amounts of 80% or better silver scrap. Some dealers raised buy discounts on lower-purity material.
Bonds sold off hard for no reason. Or rather the usual reasons; oil angst and supply.
NDX and S&Ps didn’t go up or down today. They opened and closed. However, they are hugging the lows and higher rates are not good. Volume was low, usually a sign of acceptance, not rejection.
The DOW was a leader until the IRGC shut the SOH…
Refinery margins have been flat since last Thursday, the longest period since the war started. I think this UKR strategy is bearish for oil because Russia will stop exporting refined products and sell as much crude and whatever discounts necessary to attract buyers. So will KSA and everyone else once the oil comes into the open sea. So… should be bullish for cracks.
If cracks turn lower, inventories are rising... wars or no wars… and if inventories are rising with them, what will happen when they stop?
my vibe
Stocks are lower on good news. Oil is not higher on bad news. Everything else is waiting for something else to move because organic flows are so small and ranges so narrow, there’s nothing for the algos to front run. Have to wait.
unwell 2003-ish
sister golden hair… as time passes these 2 aged well
night all… good luck in Asia…
JJ
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Crude in a range, OI falling while prices go higher with STO calling up ... appears as short covering to me.
Bonds in a bearish (price) wedge, OI falling as prices fall and STO calling down ... looks like long liquidation ;-)
Maybe all those shorts in the basis trade will get a chance to cover ;-)
The fun is in Korea.