Chinese Expansion Pushes Energy Prices Modestly Higher

On December 3, 2012 by TradingDesk

A reading of Chinese manufacturing activity moved into expansion territory for the first time in over a year overnight, which has helped push energy prices modestly higher. Refined products and WTI are now less than 1% each away from clearing significant chart resistance, and if we’re able to push above these levels, another 10% increase appears likely. We are in the seasonal window for HO to put in a bottom for the winter, and if this rally does extend, our $2.9347 low tick from the first week of November may prove to be the lowest price we’ll see for some time. The correlation between stock and energy prices remains strong however, so any forecast for the remainder of the year is forced to consider the impact of the debt discussions taking place in Washington. If a solution is found, a wide-spread relief rally seems likely, while an extended debate sets us up for another sharp round of selling across the board.

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