Prices Pulling Back Fractionally This Morning

On March 31, 2014 by TradingDesk
Off

Energy prices finished last week on a strong note, with refined products finally able to break above their respective 14 day moving averages (which had stifled rallies in 4 of the 5 previous trading sessions) on the heels of fresh tensions around the Ukraine. Prices are pulling back fractionally this morning as there was not an escalation over the weekend as many had feared. Prices are now firmly set in a range between $2.90 and $3 for both RBOB and ULSD, and the direction we break out of this range in may dictate the price action for the next few weeks.

Fundamentally, the global outlook for energy supplies remains somewhat soft, as Iraq and Iran were both reported to have pumped more oil than expected over the past few months, offsetting the output losses from Libya.

Speculative positions in energy futures & options were little changed last week. WTI and Brent held their net long positions at or near seasonal highs – betting on higher prices – while RBOB and ULSD held near their average net-length for this time of year.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Doc3

Doc4

Doc5

Doc6

Doc7

Energy Prices Continue to Consolidate

On March 26, 2014 by TradingDesk
Off

Energy prices continue to consolidate (go nowhere) after an early morning rally was wiped out in the afternoon for the 3rd straight trading session. The pattern continues today as both RBOB and ULSD futures are moving fractionally higher towards their 14 day moving averages – the level that has held back each attempted advance so far.

Traders seem to be conflicted over potentially bullish conflicts in Ukraine, Libya, and this morning’s news that Nigeria was cutting crude output again, facing off against bearish influences of stagnant global demand and increasing production of energy products. Price action over the next few weeks – will we rally back above $3 for RBOB and ULSD, or test the year’s lows – may set the tone for trading through the summer.

We’ll be traveling the next few days. Perhaps when we return there will be something more interesting to write about. Enjoy the rest of the week.

CLICK HERE for a PDF of today’s chart

Market Update (3)

Refined Product Futures Mirror the Direction of US Equities

On March 25, 2014 by TradingDesk
Off

Refined product futures had their second “head fake” trading session in a row Monday, moving higher in the morning, only to stall out at technical resistance levels and move lower in the afternoon. The action seemed to mirror the direction of US Equities, and suggests that energy prices are searching for direction from outside sources as they consolidate. The 14 day MA has become the resistance level of choice for both RBOB and ULSD futures, and is being tested again this morning, and is likely to be the deciding factor between a run at $3 for both products, or a test of new lows as we end the month.

The coast guard is preparing to re-open the Houston Ship Channel, which should limit any price impact of this weekend’s spill, despite the fact that Exxon confirmed its Baytown refinery was forced to cut runs as a result of the delay in ships available.

Ethanol continues to steal the show in terms of price action, adding another 20 cents to spot values in Chicago yesterday, as the country’s hub races to catch up with coastal markets that had been trading north of $3 for weeks as the country struggles to catch up with deliveries due to rail delays and a lack of cars.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Energy Futures Attempting Another Rally

On March 24, 2014 by TradingDesk
Off

Energy futures are attempting another rally to start the week, after Friday’s move higher fizzled in the afternoon. News that the Houston ship channel, a vital artery for the flow of petroleum products, was shut for a third day after 4,000 barrels of oil spilled when two boats collided seems to be helping keep a bid under the market. RBOB and ULSD are both close to breaking through technical resistance, which should open the door to a run at $3 later this week should they break.

The speculative category of traders cut their net-long positions in WTI and ULSD futures as of last Tuesday when COT data from the CFTC is compiled. It’s interesting to note that the complex appeared on the verge of a major sell-off early in the week, only to recover later on, so this week’s data should tell us about the conviction of those betting on higher energy prices.

Article on Houston Ship channel issues

http://www.reuters.com/article/2014/03/24/us-usa-oil-spill-idUSBREA2M01H20140324

 

Commitments of traders report

http://www.cftc.gov/MarketReports/CommitmentsOfTraders/Index.htm

 

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Doc3

Doc4

Doc5

Doc6

Doc7

Energy Futures Pull Back From A Major Sell-Off

On March 21, 2014 by TradingDesk
Off

A new battle of sanctions between Russia and the US has helped energy futures pull back from the brink of a major sell-off the past two days. Some traders are wondering what impact the sanctions on owners of one of the largest trading firms in the world might have on both physical and futures markets, while everyone else realized that Dayton had ruined their chances of early retirement.

Both RBOB and ULSD futures are testing technical resistance in the low 2.90s that had held support for weeks prior to the latest price drop. If those layers are broken charts suggest prices will test $3 near term, and remain stuck in our larger sideways trading range for the spring.

Ethanol prices continue to be the most entertaining story in physical markets, as they casually added another 16 cents to their parabolic move higher yesterday. Anecdotal evidence exists that the winter-storm/domestic crude production induced lack of rail car capacity is easing in some markets, but the price action suggests that the short squeeze is still on.

CLICK HERE for a PDF of today’s charts

Market Update Friday

Doc1 friday

 

Energy Futures Continuing to Slide

On March 20, 2014 by TradingDesk
Off

Energy futures are continuing to slide this morning, with RBOB and WTI leading the complex into the red, while Brent and ULSD struggle to hold flat. WTI has dropped back from its move north of $100/barrel, suggesting that the short squeeze – whether it was financial or physical we may never know – has past. The technical outlook remains bearish, although the price action this week suggests that conviction is lacking to follow through on the latest price drop.

Speaking of short squeezes, ethanol prices across the US are making refined products look as though they’re standing still as Chicago spot values hit $3/gallon this week (up nearly 50% in a month) and some regional markets in the US have traded north of $4 per gallon after the DOE showed another large drop in stocks across the country. The move shows yet again how vulnerable the country’s energy infrastructure is to transportation disruptions, as many areas of the country have plenty of unfinished gasoline that can’t be sold without the EPA’s mandated oxygenate.

The first FOMC announcement with Janet Yellen at the helm surprised many by suggesting that the FED may raise its interest rate targets as early as April of next year, 8 months before most previous estimates. The market reaction, although decidedly negative for US Equities (so far) was fairly muted, with drops of less than 1% for most major indices.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Doc3

Doc4

Doc5

Doc6

Doc7

Doc8

Doc9

Doc10

Doc11

Doc12

Doc13

Doc14

Doc 15

Doc15

Doc16

Doc17

Doc18

 

Doc20

Doc21

Doc22

Doc23

 

A Tale of Two Energy Markets

On March 19, 2014 by TradingDesk
Off

We have a tale of two energy markets this week, as Brent Crude and refined products continue their slide lower, while WTI prices have broken back north of $100. The action in price spreads and cash markets suggests the move in WTI is a function of a supply disruption, rather than a new trend for the complex to follow. The moves in refined products and Brent however are threatening long-term bull trend lines that could push prices dramatically lower this year. Today will be a busy day for news, with the DOE report out this morning, and the FOMC making their latest statement this afternoon. Industry focus will drop off dramatically tomorrow when the NCAA tournament begins, so we may well see March Madness in full form today.

WTI crude at Midland Texas was said to have traded as much as $20 per barrel below WTI at Cushing OK yesterday, after a pipeline that carries crude from Texas to Michigan was shut due to a leak, backing up supplies at the origin point. As the chart below shows, this discount is an all-time record, and – similar to how Canadian grades have priced over the past few years – shows how vulnerable prices can be based on their location and the infrastructure available to bring that product to market.

JP Morgan is reportedly selling its physical commodities unit to Mercuria. This is the latest in a string of banks that have exited the space in the face of rising regulatory pressures and diminishing returns.

More detail from Reuters on the banks exiting the physical commodities arena.

http://in.reuters.com/article/2014/02/05/banks-commodities-jpmorgan-idINL2N0L51PO20140205

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Energy Futures Treading Water This Morning

On March 18, 2014 by TradingDesk
Off

Energy futures are treading water this morning, after a furious sell-off Monday finally pushed RBOB and ULSD prices below technical support in the low $2.90s. Both refined product contracts now look to take another step lower based on technical indicators, although a constant flow of headlines out of the Ukraine and Libya are keeping the markets on edge, and could spark a rally at any moment. They key over the next few days will be if the old support now becomes resistance that repels any attempt to rally – and cure the “over-sold” position on the charts – just as they did overnight.

US Equities may also staunch some of the selling as they push higher this week, in what appears to be optimism that the FED will announce some form of flexibility in its monetary policy this week, even if it does reduce its quantitative easing again.

A report that China now has a surplus of diesel supplies amidst an increase in Asian refining capacity, is weighing on Asian and European distillate prices this morning, and could keep a lid on the export-reliant US market, which is already 15-20 cents below year-ago values as shown below. It’s notable that while ULSD futures have wiped out most of their Winter-Storm induced backwardation, while WTI has maintained the shape of its forward curve, presumably due to expectations of continued domestic supply growth.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Doc1

Doc2

Energy Futures Down Roughly 1% This Morning

On March 17, 2014 by TradingDesk
Off

Energy futures are down roughly 1% this morning, and global equities are moving higher, after Russia and the Ukraine managed to make it through the weekend without any (reported) violence. News that US Navy Seals had seized the Libyan oil tanker that rebels had commandeered last week does not seem to be having an influence on commodity prices, although it’s suggested that the movie script has already been sold.

The overnight drop in energy prices wiped out Friday’s bounce, and puts values back on the brink of a major move lower. WTI/Brent and ULSD futures are all challenging the bullish trend lines that have held under all attempted sell-offs since the summer of 2012, while RBOB is threatening a 20 cent drop should support at $2.90 fall.

Large speculative traders cut back their net-long positions in WTI/Brent and ULSD last week, and many oil analysts suggest the length remaining could be a cause for lower prices if those positions (which are assumed to be leveraged) are forced to liquidate following the sell-off that will create margin calls for anyone betting on higher prices.

CLICK HERE for a PDF of this morning’s charts

Market UpdateWTI non comm

WTI managed

Brent managed

HO Non comm

HO Manged netRBOB NON

RBOB managed

 

A Day of Extremes for Energy Prices

On March 14, 2014 by TradingDesk
Off

Thursday was a day of extremes for energy prices, as ULSD futures dropped to their lowest level since November, while gulf coast RBOB prices surged 22 cents (despite RBOB futures dropping on the day) on the first trading day for the summer RVP Spec. Ethanol continued its wild ride, with futures adding 20 cents this week, now trading north of $2.50 in the Chicago hub, with some regional markets trading above $3.50. The price dislocations among all refined products across the country show just how vulnerable the nation’s supply network can be to disruptions from weather or EPA requirements.

The technical outlook continues to favor lower prices over the next few months, and weakness in global equities (Japan’s Nikkei index dropped 3% overnight, following the worst day for US stocks in a month) is adding to the negative sentiment. ULSD futures have moved into “over-sold” territory however, and are having what appears to be a profit taking/short covering bounce this morning, while RBOB values are stagnating. $2.90 remains a pivotal level for both contracts for determining direction over the next few weeks. New Russian military exercises are also cited for some modest strength in Brent and WTI this morning, as traders are reminded that while the tensions in the region have eased, they have not gone away.

The International Energy Agency (IEA) suggested that oil prices would ease in 2014 as new production from Iraq and Iran (which has already reached a 1-year high in exports following reduced restrictions due to its agreement with the West over its nuclear program) would offset any global demand growth. The agency also predicted that the Ukrainian drama would not have any long term impact on physical crude oil supplies or prices.

CLICK HERE for a PDF of today’s chart

Market Update (3)

Pages:123»