With the presidential debate somewhat calmed as Joe Biden tries to clear a path for Kamala Harris (touched on below) with enough alleged support to secure nomination, there does seem to be less anxiety around markets and the shelving of what the 'Trump' trade might actually mean. Focus instead turns to company reports which kicks off today with the bellwether Tesla and long-time favourite, but not often mentioned, Alphabet (Google). When the 'magnificent seven' are notching their marks on the profit scoreboard, markets can forget the traditional drivers such as consumer leader Coca-Cola and industrial marker General Electric. The tech stocks receive all the attention, but the old school investment homes often give a deeper insight into the plight of the American economy, something that will be important in front of the tier 1 data, PCE Index at the back of the week. With a raft of other results revealed before we get to the Federal Reserve's supposed favourite inflationary measure, it will be difficult to interrupt the focus they rightly deserve.

The machinations of the wider suite might not prop or take bites out of oil prices until different gazes converge at the US inflation reading, or if indeed an outlandish profit report pushes the Nasdaq and S&P to even greater heights. Oil is starting to feel as if it is heading for the doldrums. Canadian wildfires and predicted draws in US Crude and Gasoline stocks are very much keeping the bull story alive, however, and at present, the succession of demand markers, imports and dare one say a lack of cohesive plan for stimulus in China serve to offer a wet blanket and give pause for those on the lookout for a print above $90/barrel in Brent. Keeping with the North Sea basket, the monthly cycle approaches the 'limiter' period in futures and where the M1/M2 travels into expiry will be keenly regarded for signals on how tight the market might just be, and whether the 'roll up' of backwardated spreads continues as seen in the WTI expiry of yesterday.

Kamala Harris, probably not that good, but probably not that bad

Oddly, in a report that is supposedly a look into the fundamentals of what might be influencing oil prices, we find ourselves strangely besotted by the Presidential race in the United States. Without beating ourselves up at seeming to wander off the path of oil observations into the heady world of politics, we take comfort in likely being matched by the world in all its chaotic marvellousness because of the influence that the office of the most powerful person in the world holds. There was an inevitability of the stepping aside of President Biden, without indulging in kicking a man when he is down, and so is the nominee presumptive, his long-time running-mate Kamala Harris. This is assuming of course Harris survives the Democratic Convention where they are known to eat their young, therefore, her heir-apparent status is not exactly nailed on. But one can only deal with the cards dealt and try to have a stab at what this normally backgrounded politician might just think on energy.

Unsurprisingly, the portents for the oil industry do not look ideologically good as far as Harris is concerned. History reports of an ex-Attorney General of California that rarely shied away from confrontation with the oil fraternity. In 2010, while in the running for the AG post, she was at the front of legislation requiring heavy polluters to cut emissions or be penalised using an offset credit scheme. After being the subject of some tennis like court rulings, this then became something of a basis that the successful Californian carbon market is based around. A triumvirate of legislative goals were adopted in which clean air laws must be guarded, a hefty scrutiny of polluting equipment applied, and in some ways more interesting for oil watchers, an overt opposition of new fossil fuel infrastructure development. Before joining the senate Harris brought about limits to rail lines for oil transportation, opposed refinery expansion and brought suits against fracking. In a 2019 Presidential CNN Town Hall debate, the then Senator for California said, that as President, she would tell the Department of Justice to go after oil and gas companies that profited from harmful behaviours to the environment. It will be interesting to see whether her forceful views, while standing as a serious West Wing contender, will soften on penalties for those who impact on global warming. She has previously been recorded as saying, “when you take away [financial reasons] because you take them to court and sue them, as I have done, it’s extraordinary how they will change behaviours.” Hit them in the wallet has never really worked in the United States.

In another previous campaigning interview, Harris expounded that her views were driven by social concern. Having already offered an opinion that it fell on the poorest of society to shoulder the burden of pollution and climatic fallout, she proposed an establishment of an independent Office of Climate and Environment Justice Accountability. A quango-type organisation where front-line communities could air concerns and in which Federal assistance and compliance in aid might be measured. Although the Vice President is considered to be very much ‘left’ of where Joe Biden’s forever association with middle class America might have sat, most Washington watchers seem to agree that there will be no dramatic change in direction on climate change policy. Afterall, vociferousness as VP might not be easily allowed if Harris becomes the bid dog. Indeed, Vice Presidents of the past in the US have often been used to sound board possible controversial policies before blame can be laid at the door of the Oval Office, Bidens ‘spare’ might just have been playing the fall guy.

However, such principled, historical attitude towards fossil fuels will be hard to roll back and critics of anything green along with the ‘Trumpeteers’ will quickly point out Harris’ objection to offshore drilling, fracking and licensing for exploration on Federal land. In the wider context she co-sponsored the failed ‘New Green Deal’, a massive government funded plan on energy transition, economic equality and healthcare. Earlier this year, and in a bid to woo younger voters and a drifting liberal base, Kamala Harris made the news rounds armed with an enormous boast of delivering $1 trillion in investments over the next 10 years to reduce greenhouse gas emissions, boost climate resilience and support adaptation, and build a clean energy economy. Packaging all this up into a neat and more importantly quiet centrist stance will take some doing. One does not get to be VP of the only superpower on the planet without having some political acumen and despite her admission of never being to Europe, she must be fully aware that the lurch to the right on the Old Continent in some way has been in protest against unrealised benefits of massive green investments. This of course is fertile ground for the Trump campaign. Harris will have to be liberal, expansive and environmentally cuddly to capture the nomination, while not being so out on a limb as to become easy pickings for the MAGA brigade to paint the VP as a latter-day Robin Hood using green issues to redistribute wealth. Fossil fuels, green energy et al will be a political ball that Kamala Harris will find hard to avoid. That is of course if she makes it through the Democratic Nation Convention, for if not, we get to write this all again.

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