Trump’s Recovering – And Markets Are, Too

The market is springing higher this morning, erasing most of Friday’s losses on news that President Trump’s condition is improving. Markets sold off last week in a wave of uncertainty. Virtually every media source has turned to questioning how President Trump’s test would affect mandatory quarantines, the election, and even national security. This morning, reports indicate the President is recovering and may be discharged from Walter Reed later today.

While the president has been quarantined, his Twitter is still as active as ever. President Trump tweeted that Congressional lawmakers need to “Work together and get it done.” House Democrats last week passed a $2.2 trillion stimulus bill which includes another round of $1,200 checks and reinstating the additional $600 unemployment benefits. Treasury Secretary Mnuchin’s plan, which also contains stimulus checks but would only provide $400 in additional unemployment benefits, would cost an estimated $1.6 trillion. With an election around the corner, both parties are hoping to score a political victory by passing stimulus legislation.

Shifting from politics to oil fundmaentals, Reuters analysis from the weekend highlighted progress made in working down US diesel inventories, which swelled to 29% above the five-year average before falling back to just 21% above seasonal levels. Forward margins have improved marginally, and Reuters now expects that diesel inventories could return to normal by March 2021, in line with the EIA’s expectations for the normalization of global oil inventories. As always, though, there’s significant uncertainty ahead, and a second wave of lockdowns may cause inventories to climb once again.

Oil prices are bouncing back this morning, recovering virtually all of Friday’s sell-off now that the market has had more time to answer the tough questions surrounding Trump’s diagnosis. Crude oil is trading at $38.78, a gain of $1.73 (4.7%).

Fuel prices are soaring as well. Diesel, which shed 4 cents on Friday, is trading at $1.1288, a gain of 4.4 cents (4.0%). Gasoline prices dropped just under 3 cents last Friday, but today are soaring to $1.1931, a 6.7 cent (5.9%) gain.