Energy Complex Sees Relief

On August 30, 2013 by TradingDesk
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The energy complex saw some relief yesterday in response to British Parliament’s rejection of PM Cameron’s proposal to interfere in Syria, consequentially leaving the US out to dry. Heating Oil gave back about 2.3 cents of Wednesday’s rally; RBOB dropped 2.8 cents. WTI and Brent prices saw a similar pull-back as traders seem willing to bring this thing back to rationality if missiles don’t start flying. Likewise, equity markets continued to rebound due to dovish war dialogue in addition to jobless claims coming in at a 6-year low and an upward revision in US GDP growth from an expansion of 1.6% to 2.5%.

Cyclone developments in the Atlantic remain unlikely as a wave 1,000 miles off the coast of The Lesser Antilles is expected to meet dampening upper-level winds. However, a wave about to depart from the west coast of Africa shows favorable signs for development in the next 2-3 days which could result in some nervous trading in the coming week. Yesterday, however, physical markets all but posted ‘Z’s with only Chicago RBOB showing life by tacking 4 cents onto its .1350 premium to RBOB.

After yesterday’s decline, the highs set by the Syria rally will provide some resistance around the 3.225 level for ULSD and 3.11 for RBOB. If for some reason we wake up on Saturday and think something needs to go boom, 3.16 and 3.23 will be a couple of hard ceilings for gas and diesel, respectively.

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Market Update

Prices Extend Gains

On August 29, 2013 by TradingDesk
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NYMEX gas and diesel prices extended their gains yesterday as tensions over the possibility of a Western military attack in Syria continues to build. With Russia, and now China, claiming to take up arms if the US/UK launch a retaliatory attack, WTI broke through to a high that hasn’t been seen since the Arab Spring of 2011 settling at $110.10/bbl. Brent crude also saw a steep climb Wednesday as it broke away from WTI posting a settlement price of $116.30/bbl. Ironically enough, equities showed a strong bounce mainly due to energy stocks’ gains on the back of a rise in oil prices.

Physical prices seemed tired Wednesday with only Gulf Coast conventional gas offering to move more than a couple cents in either direction by selling off by .0425; other region’s prices were mildly mixed. Flint Hills announced its plans to shut down its Pine Bend coker for maintenance in September leaving that region of Minnesota to depend on its supplemental supply from Mandan, ND and Superior, WI. Group 3 prices seemed apathetic to this news as a major disruption isn’t anticipated.

The EIA’s weekly DOE report released 9:30 yesterday seemed to have little effect on NYMEX or pipeline prices with the only notable figures being a slight build in WTI stocks of 3 million barrels and another 1.2% growth in already record high crude output. At this point it is still unclear whether some of these storm systems sweeping off the west coast of Africa will develop into something noteworthy; respective market impacts have remained silenced. With refined fuel prices continuing to pull away from support levels, it will be interesting to see where traders will draw the line and correct what some already consider to be an overbought energy complex.

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Market Update

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DOE Weekly Report

On August 28, 2013 by TradingDesk
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DOE Weekly Report

Energy Prices Explode

On August 28, 2013 by TradingDesk
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Energy prices exploded yesterday morning on the news that the US is prepared to launch a strike on Syria as soon as Thursday which seemed to take all markets by surprise. RBOB and ULSD convincingly broke through their technical ceilings and settled points off of the day’s highs at 3.0341 and 3.1609, respectively. As equities burned, WTI saw the largest daily gain in almost a year of $3 a barrel and gold settled above $1,400/oz. for the first time since May all of which may be signs of a new era of fear-trading as debt ceiling discussions and QE tapering loom. Higher prices are now expected short term until Syria cools off and Hurricane tensions are relieved. Long term price weakness in the US is spurred on after North America sees its second consecutive year of petroleum demand decline while global demand continues to grow.

Physical prices were mixed Tuesday and only Chicago CBOB (+.1150) saw a move larger than 3 cents in either direction. Travel data showing a broad decline in miles driven by US motorist among the country’s regions offers modest support for weaker physical prices going forward.

It seems that the bulls, that have been mainly silent (asleep) in the month of August, have finally come out to play as they blew through technical resistance levels Tuesday. RBOB and ULSD have been dropped into a sandbox of a range (about 15 cents in depth) between support and resistance levels going forward. The DOE release today may give the bears a reason to stir from their new-found hibernation or lull them further as they start to count sheep.

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Market Update

Energy Prices Weaken

On August 27, 2013 by TradingDesk
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As is traditional around Labor Day weekend, sans an imminent hurricane event, energy prices weakened yesterday with RBOB selling off a solid 5 ½ cents at the settle while ULSD was only down modestly by about a penny and a half. John Kerry’s press conference in response to the suspected use of chemical weapons resembled more of a “stern letter” than a Hawk’s declaration which could also account for some of the weakness in energy prices.

Gulf Coast physical markets seemed to wake up yesterday with conventional and reformulated blendstocks gaining 11.5 and 1.75 cents respectively in part due to busy Atlantic weather. Not to be left behind, Chicago gas grades also made large moves to the upside while most other markets remained modestly mixed.

The search for direction continues as gas and diesel drew back into familiar technical territory after pushing their resistance levels last week. Moderate downward moves into the weekend are widely expected, however, suspicious eyes still peruse the Middle East cluster and what Mother Nature is cooking up on the pond.

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Market Update

Equity Markets Rally

On August 26, 2013 by TradingDesk
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The day after the NASDAQ’s “flash freeze”, equity markets rallied despite dismal housing data carrying energy prices along with more pronounced saber-rattling coming out of the middle east. RBOB and HO settled barely off their respective major resistance levels at 3.0 and 3.1 while Brent-WTI spread continued to shrink as WTI gained about 1.50 and Brent settling only $4/bbl over the light-sweet blend. Short-sellers seemed reluctant to jump in ahead of the weekend fearing a deeper draw in Cushing stocks for September and further violence in Egypt, Libya, and Lebanon.

Gulf coast pipeline prices slid about 2 cents across the board and California gas gained a steep 17 cents while other markets remained quiet. NYMEX gasoline futures seemed to bear the brunt of the run-up from the refinery issues including Pt. Arthur’s extended outage and a scare at Pennsylvania’s Trainer Refinery regarding their catalytic cracker.

A firm settle above aforementioned resistance levels and we could see a further run-up in gas and diesel prices over the next week. If these level remain intact, a retreat to the 2-week long/strong sideways pattern is likely.

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Market Update

Refined Products Complex Mixed

On August 23, 2013 by TradingDesk
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The refined products complex seemed mixed yesterday with RBOB settling about 2.5 cents higher and ULSD marginally lower in the face of a suspected bombing in northern Israel. Energy prices all but shrugged at a 3-hour trading halt on the NASDAQ due to the ever-evasive “glitch” and continued to snooze as equity markets rallied when trading resumed. Regional product prices also felt the August lethargy with Chicago prices strengthening mildly and Gulf coast products slightly sagging on news of Motiva’s crude-guzzling Port Arthur refinery expecting to be down for as long as a month. California’s CARBOB saw .05+ cent gains while other physical markets ran in place.

Brent crude prices stalled at around $110/bbl while WTI shrunk the spread by popping up above $105 likely due to API’s report claiming an increase in YOY July petroleum demand of 1.7%.

ULSD prices are still looking bullish even after a 3 cent reversal yesterday; the main $3.10 resistance level still holds. RBOB continues to oscillate in technical purgatory between $2.90 and $3.

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Market Update

Market Swings Add Confusion

On August 22, 2013 by TradingDesk
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The FED’s July FOMC meeting minutes disappointed US stock markets Wednesday, as it now appears that all members of the committee favor cutting back stimulus programs, although no one seems to agree on when that should happen. The selling in stocks snuffed out another rally in refined products which had initially bounced following a large draw in gasoline stocks reported by the DOE.

Brent crude has pulled back below $110/barrel as one of Libya’s smaller oil ports opened for business, although its two largest facilities remain shut for a fourth week by protesters. Egyptian fighting has also seemed to cool in the past 48 hours, limiting the upside pressure on crude due to supply disruptions. The premium for Brent vs. WTI crude continued to widen, despite the fact that crude stocks in Cushing OK have dropped by 25% in the past two months according to DOE statistics, following news that a pipeline flowing into the hub was restarted for the first time in a year. This spread remains one of the most important factors in physical product markets, due to its impact on regional refining economics, and these latest swings add more confusion to what is already a mixed outlook for RBOB and ULSD.

ULSD futures continue to have a modestly bullish outlook, with $3.10 remaining the key pivot point. RBOB is stuck in neutral in a range between $2.90 and $3.

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Market Update

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DOE Weekly Report for August 21, 2013

On August 21, 2013 by TradingDesk
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DOE Weekly Report

DOE Weekly Report

On August 21, 2013 by TradingDesk
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DOE Weekly Report

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