Energy Complex Showing Modest Losses

On October 21, 2013 by TradingDesk
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RBOB and ULSD traded in a small, 3 cents range over the weekend with most traders holding out for the DOE report to be released today. The energy complex is showing modest losses this morning with WTI slipping below $100/bbl for the first time since July on hopes that today’s report will mirror API’s (released last week) showing a sizable build in crude stocks at Cushing.

ULSD still needs to break a number of supports around the $3/gallon to gain some selling momentum; RBOB’s 14-day MA seems to be the only major support level keeping it afloat at about $2.65/gal

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Prices Survive Another Attempt to Sell-Off

On October 18, 2013 by TradingDesk
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RBOB and ULSD futures have traded in a 10 cent range this week, and yet they’re currently trading within a penny of where we began. Yesterday prices survived another attempt to sell-off, as WTI traded as low as $100.03, but failed to break that psychologically important level.

Today prices are nearly 1% higher, apparently buoyed by Chinese GDP data that showed the world’s engine for growth beat expectations with 7.8% growth in Q3. Lost in the detail of the report is news that the country’s oil demand actually fell for the first time in nearly two years.

The EIA will release this week’s inventory report on Monday morning, and then will return to its normal schedule Wednesday. The non-farm payroll report will come out on Tuesday.

With energy prices stuck in a sideways pattern, and a flood of data in front of us, the only prediction I’d make at this point is for increased volatility, although several technical and fundamental indicators lean towards lower prices ahead.

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RBOB Gasoline Futures Surge to Highest Levels of the Month

On October 17, 2013 by TradingDesk
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RBOB gasoline futures surged to their highest levels of the month Wednesday as news broke that a deal to raise the debt ceiling and end the partial government shutdown were imminent – as many suspected, just hours before the October 17 deadline. WTI and ULSD futures rallied as well, although their tone was muted, and some selling at the close limited the gains. Prices are now set to test the upper end of their October trading range. Peg the $2.70-$2.72 range for RBOB and $3.05-$3.08 range for ULSD as resistance.

Overnight, prices have moved lower as markets digest the temporary nature of the deal reached. With the government funded until January 1, and the debt ceiling raised only enough to last until February, we will only receive a brief respite from the drama. It should also be noted that the last time we saw a similar move in August of 2011, US stocks dropped sharply after the deal was made, and refined product prices dropped 50 cents in sympathy.

Now that government employees have been ordered to return to work, expect a flood of data over the next week, as agencies try to sort through the backlog. I’d expect an uptick in volatility as traders, both human and headline-reading algorithms, try to keep up.

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Energy Futures Survive Another Sell-Off

On October 16, 2013 by TradingDesk
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Energy futures survived another early sell-off Tuesday, and by day’s end were close to flat. It appears that there is a general lack of conviction as long as the Drama in DC plays on, although charts continue to give slight favor to lower prices ahead.

RBOB has attempted a small rally in the last 20 minutes on news that a dock collapsed at the PBF refinery in Paulsboro NJ. No details are available yet, but with a general lack of data available, expect this to be watched closely for any potential impact on the NYH market.

To commemorate the first time in 30 years that the DOE will not release its weekly inventory report, we will take a look at stock levels at the European hub of Amsterdam/Rotterdam & Antwerp (ARA). Similar to the US, gasoline stockpiles are ample, while diesel (gasoil) stocks remain toward the bottom end of their 5 year ranges. Diesel stocks will be watched closely to see if the increased refining capacity focused on the export market, particularly in Saudi Arabia and India, will supplement traditional supplies from the US and Europe.

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Indecision Reigns

On October 15, 2013 by TradingDesk
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Indecision reigns in DC, and now in energy futures, as RBOB, ULSD and WTI all survived another attempt to sell off Monday morning, and ended the day essentially unchanged. We are trying to sell off again this morning, as talks with Iran over their nuclear programs are alleged to have made some sort of progress, although nothing tangible has changed. We’ll have to wait and see if this latest round of selling finally breaks us out of our October sideways trend.

Watch $2.60 for RBOB, $3 for ULSD and $100 for WTI as the key pivot points. If we break, products should have another 15 cents of downside to end the month.

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Equity and Energy Prices Heading Lower

On October 14, 2013 by TradingDesk
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No deal in DC, so equity and energy prices are heading lower this morning. Look for a test of support at $100 for WTI, $3.00 for ULSD and $2.60 for RBOB futures this week.

The DOE shut down the EIA Friday, so for the first time in 33 years, there will not be a weekly report on US supply. Meanwhile, data from the IEA – based in Paris – has been grabbing attention, as it predicted Friday that the US will overtake Russia as the world’s largest oil producer by next year. It also reported that Saudi Arabia, Kuwait, The UAE and Qatar have produced record volumes of oil the past 3 months, largely offsetting problems in Libya and Nigeria.

Speculators increased their net long positions in Brent last week, as the contract broke back above $110 and the premium to WTI surpassed $10 for the first time since June.

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Rumors, Suspect Headlines and DC Dominate Markets

On October 11, 2013 by TradingDesk
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Rumors and suspect headlines continue to dominate market action as the DC drama plays on.

Rumors of a deal to raise the debt ceiling – for 6 whole weeks – and end the partial shutdown of the US Government sent US equity indexes up more than 2% Thursday. Energy futures had their strongest day in over a month as refined products rallied in sympathy. There has been no official word on what this plan is, so we’ll have to see if the market “sells the news” when it comes, but energy futures aren’t waiting on stocks any longer, already having given up the much of those gains overnight.

Reporters obtained a leaked copy of an EPA draft proposal suggests that requirements for all 4 categories of renewable fuel blends would be cut dramatically in 2014, and sent ethanol RIN Values plunging by as much as 16 cents on the day.

And finally, in the category of “you can’t make this stuff up”, Twitter joined in on the action as a 40-year-old story caused a brief spike in crude oil prices.

The Israeli military tweeted Thursday that Israel’s Air Force had bombarded airports in Syria to prevent weapons from reaching Syria. When word got out to violence-conscious oil traders, oil prices reportedly jumped $1.

The tweet that spawned the panic was factual–only it was recalling an event from 40 years ago.

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Energy Prices Tumble

On October 10, 2013 by TradingDesk
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The largest weekly increase in US Crude stocks in a year sent energy prices tumbling Wednesday morning. The sell-off in refined products was short lived however, once the size of the refinery run cuts made in the past week started to sink in. When the day ended, WTI had reached its lowest settlement since the 4th of July while RBOB and ULSD remained firmly entrenched in their recent trading range.

Prices are getting a boost this morning on news that the Libyan Prime Minister was abducted overnight. The latest word is that he has been released, but the story suggests that a smooth return of 1 million barrels/day of crude exports from the country – shuttered due to protests – is unlikely.

The FOMC minutes from September showed that all of the members are still expecting to begin cutting back their Quantitative Easing by the end of the year. Equity markets managed to reverse losses after the report, apparently relieved that a more aggressive timeline for tapering was not discussed.

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DOE Weekly Report

On October 9, 2013 by TradingDesk
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DOE Weekly Report

Energy Markets Stuck in Sideways Pattern

On October 9, 2013 by TradingDesk
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Energy markets remain stuck in a choppy, sideways pattern, after an attempt to rally Tuesday failed at near term resistance levels. Prices are a mixed bag this morning, with Brent and WTI both down modestly, RBOB up a penny, and ULSD flat. The chart below shows that RBOB prices have stalled at the 14 day Moving Average in 6 of the past 10 sessions. If this level breaks, we should expect a fast move to $2.70. If it continues to hold, expect another test of the year’s lows. ULSD meanwhile needs to break above $3.05 if it is to continue its recent run higher.

After a week and a half of government shutdown distractions, the FED will take back the spotlight today as Janet Yellen will be announced as the new Chair, succeeding Ben Bernanke when he steps down next year. In addition, the minutes of the FOMC’s September meeting will be released at 1pm, and scrutinized heavily to try and determine when the FED’s quantitative easing programs will be cut back.

Even though most government reports are absent due to the 9-day old partial shut-down, the DOE is still expected to release its weekly data at 9:30. Continue to watch the refinery run rates to see if seasonal and economic factors are forcing plants to cut runs.

RBOB prices have not been able to get back above the 14 day Moving Average

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