Refinery Issues Overshadow the FED

On October 31, 2013 by TradingDesk
Off

Refinery issues overshadowed the FED Wednesday, after Irving Oil, a major contributor to the Nymex delivery hub in the NY Harbor confirmed that it had to unexpectedly shut units at its refinery in New Brunswick. RBOB values spiked 4 cents on the news.

WTI continued its slide, as the DOE confirmed that domestic stocks continue to rise near record-high levels for this time of year, despite refinery throughput rates that are above their 5 year trend. With Middle East supply concerns keeping a floor under Brent, the spread between the world’s two major crude contracts moved past $13, after beginning the month at $4.

The FOMC announced that it would maintain its $85 billion/month bond buying program as is for the time being, and yet equity markets sold off. It is said that bull markets don’t end on bad news, they end on a failure to rally on good news, now we’ll just have to wait and see if that plays out as we head towards year end.

The technical outlook for RBOB and HO remains mixed, with little near term direction. Seasonal factors suggest that we should see lower prices over the next two months.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Doc3

Doc4

Doc5

Doc6

Doc7

Doc8

Doc9

Doc10

Doc11

Speculative Interest In Energy Markets Remains Near Record Levels

On October 30, 2013 by TradingDesk
Off

WTI crude is down nearly $1/barrel this morning, after the API reported another 5 million + barrel build in domestic stocks last night. Brent crude is moving higher, as Libya’s government failed to negotiate an end to the protests that have shuttered nearly 1 million barrels/day of crude oil exports. RBOB and ULSD are left stuck in the middle of the crude tug of war, and are both fractionally higher on the day.

Similar to the fundamental situation, technical indicators are mixed, with both bullish and bearish signals appearing.

ULSD will need to break back above $3 for any sustained rally to form, with $2.90 providing support. RBOB has a similar range between $2.55 and $2.65 that it must break to find direction.

It will be a busy news day with the DOE report out this morning and the FOMC announcement this afternoon. The S&P 500 remains at record highs as equity investors continue to bet on accommodative monetary policy from the FED. Although the correlation between stocks and energy prices has broken down in 2013, don’t be surprised to see the two move in tandem this afternoon, as speculative interest in energy markets remains near record levels.

CLICK HERE for a PDF of today’s chart

Market Update (3)

Middle East Violence Sends Energy Prices Higher

On October 29, 2013 by TradingDesk
Off

Middle East violence sent energy prices higher Monday, with news that a major Libyan port had been shut the most significant headline of the day. Overnight, reports surfaced that the crude export facility had not been shut, and prices gave back roughly half of yesterday’s gains. Despite the bounce yesterday, WTI, Brent, RBOB and ULSD all remain in their bearish trends, which suggests more selling if this latest drama quiets down.

The CFTC is still working to get back on schedule with its Commitments of Traders report, with the most recent data only through October 1st, but it does show that speculators continue to trim their long-bets in WTI and RBOB and are – or at least were 3 weeks ago – now net-short on ULSD futures. Brent net-longs held by money managers remain high historically, but are dropping from the summer’s record highs.

The FED will take center stage again, as it begins its 2 day FOMC meeting today. Just like a month ago, the focus is on whether or not to cut back on pumping liquidity into financial markets. For energy prices, any sign of tapering should add to the bearish sentiment, while no change should push us higher short term.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Doc3

Doc4

Long Term Indicators Still Pointing to Lower Prices

On October 28, 2013 by TradingDesk
Off

Revived conflict in Libya placed upward pressure on Brent crude Sunday, kicking it up to about $107/bbl as WTI falls to $97/bbl. Refined products have experienced tame buying this morning placing them up +2 cents from this weekend’s lows. ULSD still remains at low prices not seen since mid-summer, RBOB matching lows from November of last year. Despite their weak prices, refined product cracks have increased since September due to a spiraling WTI contract.

With long-term indicators still pointing to lower prices, RBOB will have to climb about 3 cents to meet resistance, ULSD would need about 7. Breaking above these will be key in reversing a downward trend set in early September.

CLICK HERE for a PDF of today’s chart

Market Update (3)

Energy Markets Survive Attempted Sell-Off

On October 25, 2013 by TradingDesk
Off

Energy markets survived another attempted sell-off Thursday, with RBOB changing its recent pattern of being the weakest link in the complex, and leading a rally of nearly 4 cents after hitting fresh lows for the year overnight. A fire at Citgo’s refinery in Lemont IL was blamed for much of the move, getting an assist from an oversold technical condition.

The refinery fire also ended the October meltdown in Midwest markets, with Chicago gasoline differentials gaining a dime on top of the futures advance, and Group 3 values rose a nickel. Despite the bounce, charts continue to point to lower prices ahead, with both ULSD and RBOB poised to drop another 15 cents should nearby support finally fail.

Meanwhile, the most volatile market of the year – that for EPA mandated Renewable Identification Numbers (RINs) – continued its dramatic drop, as bets were made that the 2014 obligation for refiners would be reduced. Word is expected in November, although the recent government shutdown may delay that ruling. The drop in values reduces the incentive for US Refiners to export products (exports do not create a renewable obligation, while domestic sales do) which could put further pressure on prices over the winter.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

US Production Outpaces Imports

On October 24, 2013 by TradingDesk
Off

For the first time since the summer of 1994, the US produced more oil than it imported last week, according to Yesterday’s DOE report. The first chart below shows 30 years’ worth of data for each point. While that news helped push WTI lower for a third straight day, prices still stand at $96, compared to $19 the last time this happened.

Total crude stocks surged another 5 million barrels last week, the highest monthly increase in 18 months, but the bulk of the build came along the gulf coast, not in the Cushing OK hub, suggesting that the Nymex delivery point bottleneck, often cited as a reason for Brent’s premium to WTI, may be circumvented by increased crude output in Texas.

RBOB and ULSD both sold off heavily yesterday, as the DOE’s demand estimates continued to show weak domestic consumption, and technical support levels began to break down. Gulf Coast & Midwest gasoline prices are now 25 cents lower in just the past 5 trading sessions, and spot ULSD prices are down 12-15 cents. Both contracts are on the cusp of another major move lower, although some technical support must still be broken in the $2.50 range for RBOB and at $2.90 for ULSD before a real sell-off can occur.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Doc3

Doc4

Doc5

Doc6

Doc7

Doc8

Doc9

Doc10

Doc11

 

DOE Weekly Report

On October 23, 2013 by TradingDesk
Off

CLICK HERE for a PDF of the DOE Weekly Report

DOE Weekly Report

WTI Drops to Lowest Level Since July

On October 23, 2013 by TradingDesk
Off

WTI dropped to its lowest level since July 4th Tuesday, as stockpiles in the US increased and the EIA released a report showing that the Eagle Ford shale formation had beaten the Bakken in the race to 1 million barrels/day of production. The rapid growth of onshore crude production in the US continues to surprise many market watchers and has sparked another rally in the Brent/WTI spread. RBOB and ULSD are weaker, but as has been the case over most of the past 3 years, they are showing relative strength by taking the lead from Brent crude, rather than from WTI.

The increase in the spread has also caused a widespread sell-off in cash basis values East of the Rockies, in both gasoline and distillates, as many expect inland refiners to run harder now that their advantage of running disadvantaged crude has returned. Today’s DOE report – which gets us back on the regular schedule – will be watched closely for any increase in PADD 2 refinery runs.

Technical studies are pointing lower for all of the energy contracts, with $2.50 and $2.90 the next downside targets for RBOB and ULSD respectively.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

DOE Reports WTI Draw

On October 22, 2013 by TradingDesk
Off

Yesterday, the EIA confirmed a 4 million barrel build in crude stocks which sent WTI tumbling to settle below $100/bbl for the first time since July 1st. Refined products fell in sympathy but an inventory draw for both RBOB and ULSD seemed to stop the bleeding and keep both above major support levels. With gas and diesel taking back much of yesterday’s loss and WTI down about $.20/bbl, HO cracks are back at levels not seen since early May.

Look to $3 range for diesel, about $2.65 for gas, as support levels. RBOB has about a dime to climb before hitting some resistance, HO’s got about a 4 cent range to play in.

CLICK HERE for a PDF of today’s chart

Market Update (3)

DOE WEEKLY REPORT

On October 21, 2013 by TradingDesk
Off

CLICK HERE for a PDF of the DOE Weekly Report

DOE Weekly Report

Pages:123»