Equity markets slid sharply into yesterday’s close ahead of Fed Chair Powell’s second congressional testimony. Today he sits in front of the Senate Banking Committee at 9:00 a.m. Central. He commented earlier in the week that the economic outlook is strong and warrants further gradual rate hikes.
It’s "sunshine on the shoulder" season as U.S. refineries slow runs to 87.8% of capacity, running just 15.9 million barrels, the lowest level of the year as seasonal maintenance flips into high gear. The trade seemed disappointed that the overall 3-million-barrel build in crude oil supply was higher than expected. That is what should you expect when seasonal maintenance is happening.
In a busy day, the highlight is new Federal Reserve Chairman Jerome Powell’s first semi-annual congressional testimony. He appears in front of the Senate Banking Committee today at 9:00 a.m. Central. His prepared remarks will be released at 7:30 a.m. Central and his outlook will be dissected in every way.
From glut to shortages. During downturns in major commodity markets, there is a tendency to get all doomy and gloomy about the future and get locked into a lower than longer mentality. That kind of short-term thinking has engineered a major bottom in petroleum, and now that type of thinking may have an on impact natural gas.
Global equity markets have started the week off strongly and we are taking Friday’slow volume argument with a grain of salt. The S&P 500 picked up right where it left off after gaining 1.4%, it gapped higher on the open last night and extended gains after settling in just a bit. Crude oil stayed bid on Friday, trading out above $63 per barrel on a weaker U.S. dollar and continued chatter from OPEC.
Even as crude oil supply may rebound this week the tightening global oil supply is becoming more apparent. Global demand fed by low prices and OPEC compliance has seen the global overhang of oil practically disappear. We saw more support from geopolitical issues as Libya declared a force majeure after an attack at its southeastern oil field Al-Fil.
The U.S. dollar appreciated during the week against major pairs. The currency got a boost from the release of the minutes from the January Federal Open Market Committee meeting. The brief statement was slightly hawkish, but the full notes from the meeting revealed the U.S. central bank upgraded its economic projections from those made in December and expects the 2% inflation target to be met in the mid-term.