MarketTalk has moved

On April 22, 2014 by admin
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MarketTalk has moved to become a part of the newly redesigned TAC Energy website.

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It has all the previous content included, and will continue to keep you informed of all the relevant market news from the TAC Trading Desk.

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Please click here for the new MarketTalk page
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All new content and new postings will be on the TAC Energy Market Talk page.

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Energy Futures In “Wait and See” Mode

On April 21, 2014 by TradingDesk
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Energy futures seem to have moved into a “wait and see” mode, after a long weekend capped 3 weeks of gains that have added $6/barrel to Brent and WTI crude prices, 20 cents/gallon to RBOB gasoline and 15 cents to ULSD. The Ukrainian crisis continues to dominate headlines, although the impact on markets, both physical and financial is debatable. Libyan ports are in fact restarting, but technical issues surrounding operations that have been shuttered for nearly a year are delaying output and tempering any bearish influences on physical crude values.

Technically, refined products are beginning to show signs of topping out as ULSD failed to hold above its 100 & 200 day moving averages last week, and RBOB prices are showing the early stages of a rounding top. That said, several indicators continue to point to higher prices, and if current resistance breaks, there is little on the charts to prevent another 20 cents of gains for both RBOB and ULSD.

In other news, Reuters is reporting that Barclays is the latest bank to announce that it would pull out of a major portion of its commodity trading.

http://in.reuters.com/article/2014/04/21/barclays-commodities-idINL6N0ND1EG20140421

Investors poured into Brent crude and RBOB gasoline long positions last week, marking a dramatic increase on the amount of speculative money betting on higher prices.

Commitments of Traders Charts

http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm

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Market Update (3)

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Build In US Crude Stocks Does Little To Impact Prices

On April 17, 2014 by TradingDesk
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A 10 million barrel build in US crude stocks reported by the DOE drew much attention from market watchers Wednesday, but did little to impact prices. US crude production reached its highest level since 1987, and PADD 3 crude stocks hit a record high last week. The continued drop in crude stocks at the NYMEX hub in Cushing OK demonstrates that over the past few years, the industry has succeeded in relieving the Midwestern bottleneck for crude supplies. What remains to be seen is how the market will absorb the new glut of crude along the gulf coast. New reports have surfaced that permits have been obtained to import Canadian crude, ship it to gulf coast ports, and then re-export those barrels overseas. The progress of those plans could have a major influence on our market for the next few years.

Meanwhile, refined products are holding their ground north of $3, which threatens another move higher following 2 weeks of heavy buying. Technical indicators remain in overbought territory however, so a short-term pull back remains a threat. With tomorrow being one of only 3 days all year that both the Nymex floor and CME Globex electronic trading platforms are completely shut, I would expect to see choppy trading today as positions are squared ahead of the long Easter weekend. The major fundamental stories of Ukrainian violence and Libyan peace will continue to vie for control of the price action when we return next week.

Ethanol prices continue their implosion in both futures and spot markets this week, although some regional tightness remains due to backlogged rail cars. Prompt Chicago values traded below $2.50 yesterday, just two weeks after trading north of $3.75/gallon.

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Market Update (3)

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DOE Weekly Report

On April 16, 2014 by TradingDesk
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DOE Weekly Report

Energy Futures Pulling Back Modestly

On April 15, 2014 by TradingDesk
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Energy futures are pulling back modestly this morning, taking a break from their recent rally that pushed prices to their highest levels in more than a month yesterday. WTI continues to outperform, closing its gap with Brent crude to the lowest level since September. Profit taking is being seen in both outright prices and time spreads for refined products, leaving $3 as the pivot point for the forward curve on both RBOB and ULSD. Technical indicators are turning more bullish, although stochastic indicators remain in overbought territory, which makes a selloff (exactly like we’re seeing so far today) likely. Prices will need to drop back below $2.90 before the April rally can be called over.

In fundamental news, the balance between Ukrainian-related threats to energy supplies is battling (figuratively and literally) with hopes for a solution to Libyan protests that are constantly being floated, although little actual progress has been made on that front. These themes appear poised to remain in the forefront of trading as we head into the summer.

Meanwhile, the battle against high frequency trading crossed over from equities into the commodities arena this week after a group of traders sued the CME Group (the owner of the NYMEX) for allegedly selling market data to HFT firms, allowing them early access to buy and sell orders placed by traditional investors. Although the discussion over the legality and morality of HFT has reached fever pitch, there is not yet any signal that regulatory changes might be coming.

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Market Update (3)

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Refined Products Continue To Push Into The Green

On April 14, 2014 by TradingDesk
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Refined products continue to push into the green this morning, extending an impressive run that has added 20 cents to RBOB and a dime to ULSD values since April 2nd. Although 8 sessions of buying have left both contract in “overbought” territory on charts – leaving them susceptible to a corrective selloff this week – the technical outlook has changed drastically from 2 weeks ago when prices were on the edge of a major sell-off.

A handful of minor refinery issues along the East Coast of the US and Canada have aided in the price action over the past week, and have helped energy prices decouple from plunging US Equities. ULSD will face a major test at the $3 range, where both its 100 and 200 day moving averages converge, while RBOB needs to get the June contract above that same level to sustain this latest rally.

Speculators increased their net long positions in WTI and Brent last week, as dropping Cushing OK crude stocks and fresh tensions in the Ukraine seem to have given confidence to those betting on higher oil prices. Refined product length was reduced (and in the case of ULSD non-commercials, the net short position increased) somewhat counterintuitively to the move in crude and in prices for the week. In terms of speculative money, it seems that there is a strong bet being placed that higher oil prices and lower refined product prices will begin to squeeze refinery margins.

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Market Update (3)

Charts of the Commitments of Traders report:

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Energy Complex Treads Water

On April 11, 2014 by TradingDesk
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The energy complex treaded water yesterday and dropped mildly without any major news to rally on. ULSD dropped a full penny and a half outpacing RBOB, settling down a shy 5 points, and WTI, down $.20/bbl. This morning prices seem to be continuing their sideways trading awaiting almost any news that could pique some interest.

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Market Update (3)

Tired Energy Complex Shows Some Weakness This Morning

On April 10, 2014 by TradingDesk
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After rallying for the third day in a row yesterday, the tired energy complex shows some weakness this morning with RBOB in the red by over 2 cents and heating oil down by almost a penny at press time. In addition to profit taking, yesterday’s DOE release showed a surprise build in crude inventories, both at Cushing and nationwide, putting additional downward pressure on WTI and refined products. As expected, the US also saw a drop in national gasoline stocks due to the mass clearing of winter-spec gas from storage tanks.

With the EIA’s weekly input behind us, traders are now turning their eyes to Libya’s reemergence into the oil production game as well as the potential war brewing in Ukraine. RBOB topped at one of its last visible marks of resistance and has started heading towards support at the $2.91-$2.92 level. NYMEX HO has turned south as well and will run into major technical levels around $2.92.

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Market Update (3)

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DOE Weekly Report

On April 9, 2014 by TradingDesk
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DOE Weekly Report

DOE Release Will Likely Dictate Price Action

On April 9, 2014 by TradingDesk
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The EIA’s Short Term Energy Outlook (STEO), published yesterday, expects a decrease in short term crude production and a draw in crude inventories at Cushing which rallied the energy complex yesterday. WTI settled up $2 at $102.59/bbl; the highest level in over a month. Refined products also saw a strong run-up with both gas and diesel futures contracts settling above major resistance levels. European crude saw (smaller) gains as a fist fight erupted in the Ukrainian Parliament further portraying the precarious sentiment in Eastern Europe.

Physical markets remained relatively quiet yesterday with the majority of the action taking place in regions’ gas grades. Most markets, specifically the Gulf Coast as they digest the reopening of the Houston shipway, pushed back against NYMEX RBOB’s nickel gain and dropped up to 2 ½ cents relative to the futures contract. Physical ULSD traded sideways against HO’s 4 ½ cent rally.

Today’s DOE release will likely dictate the majority of the price action as traders are expecting a nationwide draw in refined products and crude oil. RBOB will run into a major ceiling around $3 if the release is bullish; ULSD will see the same around $2.96.

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Market Update (3)

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