Don’t Tweet on Me – Trump Tweets @Iran

Oil prices are making their way higher this morning thanks to escalating tensions between the U.S. and Iran. After rising early Friday morning, prices reversed, leading to the week closing at $68.26, a loss of $2.26 for the week. This morning, WTI crude is trading at $69.00, a gain of 74 cents (1.1%) since Friday’s close.

Fuel prices are enjoying some solid gains this morning following Friday’s bearish close. Diesel is back above $2.10, trading up 1.5 cents (0.7%) at $2.1193. Gasoline has yet to rise above $2.10 yet, hovering just shy of the mark at $2.0802, still gaining 1.1 cents (0.5%) since Friday.

Don’t Tweet On Me

Markets are reacting this morning to escalating threats between Iran and the U.S. On Sunday, Iranian President Rouhani noted in a speech that any war with Iran would be “the mother of all wars.” Trump tweeted his reaction to the news, telling Rouhani in all caps: “Never, ever threaten the United States again.” In recent weeks the State Department has softened its approach to sanctions, saying waivers could be an option for select companies/countries. Still, sanctions have already caused a roughly 50% decrease in Iranian exports to Europe, with more to come leading up to November.

Ready for EVs?

Tesla isn’t. Even as the company has reportedly met its goal of producing 5,000 new vehicles per week, Elon Musk’s car company, known for being a leader in the electric vehicles market, is struggling to become profitable. Although Musk has promised profitability in Q3 and Q4 of this year, many are sceptics. Recently, Tesla asked suppliers to return money to them to promote profitability, requesting discounts on projects dating back to 2016. Retroactive discounts may help Tesla achieve profitability, but it would hurt the profits of their suppliers.

While Tesla pushes towards a luxurious vision of driving electric vehicles that consume renewable fuels, short-term concerns seem to be putting up road blocks for the company. The company struggled to reach it’s 5,000 vehicles per week goal, and now cash flow concerns are hindering progress. For fuel markets, this shows that the transition to electric vehicles is proving slower than some optimistic analysts had predicted. While EVs will certainly be common-place one day in the future, that day is beginning to look a bit more distant than it used to.

It Was Rigged!

Rig counts fell by 8 rigs last week according to data from Baker Hughes, in response to American production reaching a record weekly high of 11 million barrels per day. Although prices are high and drilling is profitable, some producers are struggling to actually get the oil to market. In particular, West Texas continues to face bottlenecks in moving product, so rig count growth has slowed in the Permian basin and led to a net loss of 1 rig in the Texas/New Mexico region.

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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