Energy Market is Subdued as Biden Begins His Presidency
January 21, 2021
API said that crude stocks were up 2.6 million barrels and the outlook for Friday DOE numbers are a decline of 1.2 million barrels. Gasoline stocks were up 1.1 million barrels and the outlook are for then to be up 2.8 on Friday. Distillate stocks were up 816,000 barrels and the outlook are for them to be up 1.2 million. Cushing crude stocks did show a big 4.28 million barrel decline.
The news yesterday was all about the exit of the Trump administration and the inauguration of Joe Biden as the 46thPresident of the United States. The energy market was pretty subdued, but equities did put in a new high. The equites markets are upbeat on the ideas of more stimulus coming into the market from the Biden Administration and a Democratic controlled congress.
The API’s were bearish and put a bit of a damper on the bullishness around the new administration. We will have to wait until Friday for the DOE numbers so today maybe a bit uneventful as traders wait on those numbers.
President Biden did sign orders to halt the Keystone XL pipeline and he also halted any new oil leasing in the Arctic National Wildlife Refuge. No immediate impact will be seen here but longer term it will reduce the amount of US crude production. Biden is also expected to rejoin the Iranian nuclear deal which would remove the sanctions on Iran and could bring 2 million bpd of their crude oil onto the market.
So, there is the potential for more crude to come to market and that is potentially bearish for prices but like we have said the optimism for more stimulus, more vaccines, and the release of the pent up demand is bullish for energy. We will have to wait and see were the facts of these deals play out in come months. Will demand ramp up and tighten up supplies in the back half of the year and be supportive to prices. There are a lot of questions, but traders will be watching supply and demand to help determine where price are headed.