DOE Report for May 8, 2013

On May 8, 2013 by TradingDesk
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Tuesday Morning Buying Turned To Afternoon Sell-Off in Energy

On May 8, 2013 by TradingDesk
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In a mirror image of Monday’s trade, Tuesday saw morning buying turn into a sell-off in the afternoon as energy futures continue to struggle to find direction. This morning, US refined products are following Brent crude marginally lower, while WTI crude hangs to small gains above its key support at $95. The lack of trend seems to be a reflection of conflicting technical (e short term charts suggest more upside may be coming while longer term trends point to lower values) and fundamental (weak global demand faces off with renewed concerns over middle-east supply disruptions) indicators. Today’s DOE report is expected to show builds across the board as refiners return from maintenance and US crude production continues to surge.

Overnight action in global markets has been quiet as well, as many debate the validity of a Chinese report that showed surging import and export activity, despite 3rd party evidence suggesting just the opposite. Germany came out with its second strong data point of the week, reporting that industrial production rose much more than expected last month, which is pushing European equities into the green again, and helping the EUR/USD to break out of a week-long slump. With US equities at record highs – again – it looks like clear sailing ahead for now in stock markets.

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Yesterday’s Weak Morning Selloff Reversed Course By Afternoon

On May 7, 2013 by TradingDesk
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A weak selloff in the morning reversed course in the afternoon and energy prices continued their push higher Monday with many pointing to the increasing middle-east tensions as the reason on what was a quiet news day. Whatever the cause, HO futures are now through their first level of technical resistance, and now target $3 after having risen nearly 18 cents in the past 4 trading sessions. RBOB is also setting up a test of the low $2.90s, with a break there also setting up a move to $3.

Global equities are moving higher after the Australian central bank cut interest rates to a record low for the country, the latest in a long string of central bank action to buoy markets. German industrial orders also beat expectations, which has pushed the country’s main stock index to an all-time high. The big question for energy prices, which have broken their correlation to global stocks over the past few months, is whether all of this liquidity and market euphoria translate into increased fuel demand. If consumption does increase, the stage is set for another major price increase, but a failure suggests the past week’s buying is just a corrective bounce in a larger bear market that started nearly 2 months ago.

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Jobs Report Sparks Rally On Friday

On May 6, 2013 by TradingDesk
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Friday’s jobs report beat many estimates, and sparked a furious rally across many global equity and commodity markets. In the US, the S&P 500 and DJIA both broke records for intra-day and closing highs. Energy prices rallied in sympathy with stocks, capping a two day rally that added a dime to refined product prices, nearly wiping out the losses earlier in the week.

Growing tensions in Syria pushed energy prices higher overnight, as Israeli airstrikes raise concerns that the violence will spread to other countries in the region. In the past few minutes however, those gains have turned to losses as energy prices continue to struggle to find direction. A headline stating that chemical weapons were used by Syrian rebels, not the government as had been suspected, may be to blame as it makes US intervention less likely in the near term.

Investors continued to cut speculative long positions in RBOB and Brent crude last week, while WTI positions held steady and the net-short position in HO shrunk modestly. Technical studies remain mixed, with WTI appearing to be on the verge of another rally, while refined products are stuck in neutral ground, with a move above $2.90 or below $2.70 needed to begin a new trend.

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Energy Charts for May 3, 2013

On May 3, 2013 by TradingDesk
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Morning Energy Charts for May 2, 2013

On May 2, 2013 by TradingDesk
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DOE Report For May 1, 2013

On May 1, 2013 by TradingDesk
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Energy Prices Finished April On A Weak Note, Continuing This Morning

On May 1, 2013 by TradingDesk
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Energy prices finished April on a weak note, and have picked up in May where they left off, with values already down more than 1% on the day. Another weak manufacturing reading from China overnight has been blamed for the selloff, which covers most global equity and stock markets. The S&P 500 set record intra-day and closing high yesterday, despite several more economic indicators that suggest the US economy is slowing, with many suggesting the weak data is actually bullish for stocks, as it makes more likely that the FED will continue printing money injecting liquidity into the markets.

Speaking of the FED, they are wrapping up a 2-day Open Market Committee meeting today, and their latest announcement is due out this afternoon. With markets already trading rapidly overnight, new money ready to be deployed as we start a new month, and the DOE report due out in a few hours, it’s likely to be a busy day of trading. Charts are still stuck in neutral for energy futures, but RBOB appears ready to be the first to test support at $2.70. If that level breaks, it looks likely that the May pattern over the past 3 years of a 30-50 cent price drop may continue for a 4th year.

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