Products Moving Higher This Morning

On July 3, 2012 by TradingDesk

Products are moving higher this morning, with gas up 8 cents and diesel up 6 cents, while crude oil is up $3.25 bbl. Prompt RBOB is 5 cents under overhead resistance of $2.75. Currently at $2.74, Heating Oil easily cleared yesterday’s resistance levels, with the next price target 7 cents higher. A strong close above these resistance levels paves the way for higher prices across the board in the near term.

The escalating tensions between Iran and the West is also seen as supporting the market, with talk of Iranian launching drills to test missiles, and Iranian lawmakers drafting a bill calling for Iran to shut off the Strait of Hormuz to oil tanker traffic, where more than a third of the world’s seaborne oil exports pass through the narrow strait.

Now in its 10th day, the strike over pensions has cut daily Norwegian oil production by an estimated 13 percent and has resulted in delays to crude shipments from the world’s eighth-largest exporter, helping push up Brent prices. Norwegian trade unions decided against escalating the strike, but with an average work week of 29 hours and 5 weeks mandatory vacation, the standoff could be prolonged as the union is also demanding the right for its workers to retire at 62 with pension. In 2004, the Norwegian oil industry’s disagreement with the labor union resulted in a four-month strike.

The NYMEX will have an abbreviated electronic-trading session tomorrow, but the floor will be closed.

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Energy Markets Down Despite Renewed Iranian Threats

On July 2, 2012 by TradingDesk

Today marks the first day of oil trading under a European Union embargo. The possibility of renewed Iranian threats, which included a vow to cut off oil shipments through the Strait of Hormuz, a major chokepoint for global oil supplies, aren’t having an effect at the moment as energy markets are down across the board, with a demand slump in Europe and economic slowdowns in the U.S. and China reducing fears about global supply issues.

Global manufacturing PMI reports show that Japan, Korea, Norway, South Africa and Taiwan joined the majority of the Euro area countries with manufacturing PMIs below 50, while the ongoing sovereign debt and banking crisis continues to weigh on the region’s economic activity and sentiment. The unemployment rate in the 17-nation euro zone rose to 11.1% in May from 11% the previous month, hitting its highest level since the current statistical series began in 1995, according to the European Union statistical agency report today. Spain’s unemployment rate was the highest in the euro zone at 24.6%.

Both gasoline and diesel products broke decisively through upside resistance last week, with both products having another 10 cents of upside if RBOB can clear $2.64 and HO $2.71.

 CLICK HERE for a PDF of this morning’s charts