As some of the political machines of the mid 1800s coined the jocular phrase of “vote early and vote often”, I can’t help but think about all the spirited voters racing to their local polling establishments today and how the energy and equity markets have reacted to midterm elections of the recent past. Over the past 21 midterm elections, the party of the incumbent president has lost an average of 30 seats in the House and an average of four seats in the Senate, with only twice having gained in both houses. Below is a chart depicting the post-midterm election WTI crude oil price action of the past 4 midterm elections to the end of those respective calendar years:
As we navigate through peak hurricane season, market participants are glued to their weather consoles watching, waiting, anxiously for every update to the two weather disturbances, two hurricanes and a tropical storm churning in the Atlantic and Gulf Coast.
It may be difficult to believe, but WTI crude oil has been stuck in a range for the past 22 trading sessions without catapulting above $70.06 and without collapsing below $66.32. As of the close, 2:30pm EST, WTI crude oil settled down $0.16 to $67.04/bbl. Even with all the headlines of Iran sanctions, global economic outlook darkening, U.S. Dollar rallying, emerging market contagion, (Turkish Lira plunging to a record low vs U.S. Dollar), Chinese economy slowing down?, trade war fears across the globe, and the continuation of the Venezuelan humanitarian nightmare, WTI for September delivery is only down 1% from 21 days ago. In between that trading frame, we had multiple 5% selloffs, a 6% three day rally, a couple of unch’ds (unchanged on the day) and a whole lot of uncertainty.
With all the noisy headlines that have been peppering the newswires this past month; Iran sanctions, Iran waivers, OPEC crude oil output, Russian crude oil output, Norwegian oil workers on strike, Syncrude power outage, U.S. – China trade wars, U.S. – E.U. trade wars, Nafta talks, Libyan export resumption, EIA output view increase to 12 mil barrels for 2019, and Houthi rebels firing missiles at Saudi VLCCs; WTI crude oil is on track to close the month out with a whimper, no major headlines swaying it one way or another, and down 6.85% or $5.08/bbl. Since the beginning of this, most impressive, bull market run in June of 2017, only 4 out the 14 months has WTI settled down for the month. At a quick glance the WTI monthly continuation chart isn’t ready to turn over quite yet. It has been trading above the 200day exponential moving average for the past 7 months and all the momentum is still leaning on a “no room for error”, inventory tight, geopolitical driving force trend.