It's no secret Trump has pushed his Energy Dominance agenda since Day 1 of his administration through aggressive legal and enforcement tactics as well as corralling CEOs of the nation's energy companies to invest and expand. Much of the crude oil rally since the December lows has been contingent on prospective and expected WTI demand from China. In the NG market, a bullish boon has been greater prospective LNG demand from Asia as well.
The disintegration of the trade deal has recently led China to reconsider the US as a major supplier of energy since in the current state (Huawei sanctions) depending on North American business seems to carry heightened long term risks. An article came out today about a paper published by a Chinese periodical run by the State questioning the role of the US as a major energy trading partner amid rapidly deteriorating trade relations. Today, Reuters quoted the EPD CEO that Chinese oil traders and refiners no longer want to sign long-term supply agreements with US producers. Obviously, this change in sentiment presents newfound risk to companies who have been investing in energy-related infrastructure heavily dependent on future Asian demand.
Honestly, I think the equity prices of these corporations will continue to get smoked until the CEOs tell trump, "Look you son of a bitch, we invested like you told us, now sign a fucking deal." At this point during the Summer I think he will acquiesce since these folks represent a major portion of his base for the next election cycle. I've always thought Trump's real agenda was to use oil dependence as a weapon against other countries to accomplish his political goals.
The technicals are especially bearish on a short-term and foreseeable future perspective for CL. NG is also breaking down and I don't see any reason to be long.
On a similar note, the rally in equities since December has also been largely anticipating a trade deal but the details on how an agreement would impact industrial or especially technology stocks was always fuzzy. However, for sure the deal would include large off-take of WTI and LNG by the Chinese. This view is currently disintegrating which makes the hopes behind the equity rally at large appear to burn up into thin air causing a crash.
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