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Distributor Energy Update

By: John Wenzel, Senior Risk Management Consultant

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Perspective: Morning Commentary for September 22

September 22 – The Nasdaq and S&P 500 both closed within 1% of their all-time highs yesterday, with stock futures pointing to a quietly higher open at the time of writing. Diplomacy continues to be the theme of the week, with markets pricing in optimism, particularly in the tech sector following encouraging results from the weekend’s meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. It’s also worth noting that Bessent yesterday announced the two sides would be meeting again to discuss AI safety and communication protocols in Shenzen, China in about two months, another potential sign of cooperation instead of escalation. The VIX continues to reflect optimism regarding this week’s various diplomatic pushes as it hovers near its lowest level since early September, starting the day trading just below the 14.7 mark. The dollar is sitting just above unchanged, near 100.46 at the time of writing, touching a fresh two-month high earlier this morning. Treasury yields are quietly lower to start the day, also helping bring some calm to Wall Street, with 2-year yields at 4.747%, 10-year yields at 4.949%, and 30-year yields at 5.279%. Crude oil prices continue their push lower, with nearby WTI down another 1.8% to trade near $90.30 and nearby Brent down 1.6% to trade near $98.70, both roughly two-week lows. The ags are looking at a turnaround Tuesday to kick off the session with most of the complex in the red at the break, led down by the wheat complex. Improving forecasts for planting conditions for the U.S. winter wheat crop are likely having some influence, but I’d also point out the signs of potential increasing U.S. pressure on Ukraine, which we’ll dive into in more depth below, possibly spooking out some managed money length.

Mike Castle
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Energy Stocks Broke an 18-Year Ceiling and Crude Oil Followed Down

Energy equities briefly cleared a resistance line that had capped the sector since 2008, then fell straight back under it. That failure lines up with a crude oil drawdown already visible on both benchmark charts, and it reframes what the energy trade is pricing.

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Perspective: Morning Commentary for September 21

September 21 – Diplomacy is in focus to start the week, with world leaders gathering for the U.N. General Assembly kicking off in New York tomorrow and Chinese President Xi Jinping traveling to the U.S. to meet with President Trump in a highly anticipated summit on Thursday. Given the wide array of geopolitical conflicts impacting the broader markets, this round of diplomacy may carry more importance than usual, with traders likely to cling on any signal toward an easing of tensions and resumption of global commodity flow, particularly as it relates to the energy sector. President Trump is expected to meet with Gulf Cooperation Council leaders this week to discuss the ongoing conflict in the region, with a likely increase in urgency amid the ongoing escalations between Saudi Arabia and the Iran-backed Houthis of neighboring Yemen. Iranian President Masoud Pezeshkian is also traveling to the U.S. this week, expected to address the Assembly on Wednesday. Markets will be watching the language of this address, and President Trump’s, for signals of potential de-escalation between the two sides, or for signals of a widening of the conflict. The bigger question in my mind is whether we see direct talks between Trump and Pezeshkian—Trump over the weekend said he was open to such a meeting, but nothing has been confirmed as of this morning. Additionally, Trump is expected to meet with Ukrainian President Zelenskyy on Wednesday, carrying significant implications for both the energy and ag sectors. Given the wide range of implications from this week’s diplomacy and existing managed money positions coming in, don’t be surprised by a week of volatile, headline-driven trade.

Mike Castle
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  • Grains & Oilseeds
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  • Cocoa
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  • Cotton
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  • Meats & Livestock
  • Forest Products
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