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- Energy stocks (XLE) were not immune from Wednesday's steep selloff in equities (SPY), despite relatively positive developments across the commodity landscape.
- Natural gas prices (UNG) traded green most of the day, and are set to close flat, as continued production growth challenges led Pioneer's (PXD) Sheffield to forecast Henry Hub (NG1:COM) reaching $10/mcf this year.
- US crude oil (USO) inventories fell by 7.9mb last week, as reported by the EIA Wednesday morning.
- And despite rising refinery utilization, 95% on the east coast and 92% nationally, gasoline inventories collapsed by almost 5mb on the week.
- HSBC added to the chorus of Wall Street banks calling "higher-for-longer" refining margins Wednesday, as JPMorgan's commodity strategist called for $6.00 retail gasoline prices this summer, and China cut gasoline and diesel exports by over 50%.
- In-basin coal prices east of the Mississippi continued their stratospheric rise, as elevated natural gas and seaborne coal prices improved cost support for the sector.
- Nevertheless, natural gas heavyweight EQT (EQT) fell 5%, while oil names like Marathon (MRO) and Apache (APA) fell 6%; despite positive refining commentary and collapsing product inventories, Philips (PSX) and Valero (VLO) fell 2-3%, as did integrated producers Chevron (CVX) and Exxon (XOM).
- Record in-basin coal prices were not enough to save US coal equities, as Peabody (BTU) fell 5% on the day.
- Most bull cases for energy equities rely heavily on supply constraints stemming from underinvestment, while bears point to an impending recession impacting demand; for now, the data is strong, but Wednesday's selloff spared no sector.