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Energy Analyst - KC Energy
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On this episode of Focus on Fuels, StoneX Energy Desk Director of Market Strategy Alex Hodes and Energy Risk Manager Trevor McClanahan unpack the hidden forces behind recent market moves—and what they could mean for summer prices.
After a quiet stretch, refined products are back in focus. Despite soft expectations entering 2025, refinery outages across the Atlantic Basin have created a supply crunch. As McClanahan points out, “the diesel market is starved.” That’s reflected in time spreads and crack spreads, with elevated refining margins even as inventories remain tight.
Meanwhile, China’s April crude throughput hit its lowest point in over a year. But as U.S.–China tariff talks progress and some levies have been delayed, Hodes suggests we may be finding an interim bottom: “It’s not bullish, but maybe less bearish.” A bounce in Asia’s imports could be next.
Further into the discussion, the conversation shifts to OPEC, where new quota announcements aren’t necessarily what they seem. “It’s about saving face,” says Hodes. Members like Kazakhstan were overproducing. Rather than enforcing cuts, OPEC raised the quota ceiling to restore unity—without changing real output.
On the U.S. side, shale activity is flattening. “We’re seeing layoffs,” says McClanahan, referencing anecdotal reports from the Permian Basin. Official data supports that trend, showing current production falling short of EIA forecasts.
The big picture? Despite few bullish catalysts, refined product strength and flat U.S. production could lift crude back above its recent $55 floor. “Crack spreads may narrow,” Hodes notes, “but that might be more about crude rising than diesel falling.”
For fuel buyers, traders, and risk managers, that means staying alert to refinery restarts, China’s demand curve, and shifting OPEC headlines. As always, StoneX will be watching—and helping clients prepare.
Explore the broader implications of tariffs, freight shifts, and trade retaliation on global energy flows in our latest white paper, “Tariffs, Tankers, and Tumbling Prices: The 2025 Oil Market Shake-Up.”
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---Written by: Andrew Catsimanes, Copywriter
---Experts: Alex Hodes, Director of Energy Market Strategy and Trevor McClanahan, Energy Risk Manager
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Safe-haven Treasuries are drawing support from two directions, a tech selloff and a slide in oil prices. Lower oil eases inflation concerns, adding a second driver to the decline in U.S. Treasury yields.
November 6 – Volatility remains high on Wall Street this morning, as we add the monthly jobs report to the post-election market correction. The Nasdaq dropped sharply on Thursday amid a fear that the Democrats taking over Congress would create major challenges for tech companies – especially those involved with AI. It’s trying to bounce this morning, but the headlines over AI risks continue to flow. Today’s jobs report should help to redirect some of that focus momentarily, but the possibility of more volatility clearly remains with us. As such, the VIX – Wall Street’s “fear index” – is trading near 27 at this hour. My observation over the decades is that commodity assets struggle to sustain rallies when the VIX is above 30, unless that asset has a strong story of its own. The dollar index is trading near 102.3. Yields on 10-year Treasuries are trading near 4.86%, while yields on 2-year Treasuries are trading near 4.53%. WTI crude oil is trading near $91, while Brent trades near $98 per barrel. The grain and oilseed sector traded mixed overnight, with wheat posting double-digit losses, while corn and soybeans were either side of unchanged in early trade.
November 5 – Stock futures are pointing to a mixed open after yesterday’s surge higher, with the Dow Jones looking to add to yesterday’s 3% gain and potentially flirt with pushing to three-month highs, while the tech heavy Nasdaq is looking at a lower open as money rotates out of tech, and the S&P 500 is caught in the middle. The VIX remains notably lower than recent weeks, though up slightly from yesterday’s close, hanging near 16.8 at the time of writing. The dollar is rebounding from yesterday’s losses amid unexpectedly strong U.S. labor market data this morning, reinforcing hawkish Fed bets, as it trades near 101.65. Treasury yields are higher to start the day as well, with 2-year yields trading at 4.618%, 10-year yields at 4.909%, and 30-year yields at 5.288%. Crude oil is bouncing after incredibly sharp losses in recent days, with nearby WTI currently up 2% on the day to trade near $89.80 and nearby Brent up 2.6% to trade near $97.10. Meanwhile, the ags are higher at the break as they look to find a rebound of their own.
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