A Tale of Two Refineries

On January 28, 2013 by TradingDesk

Reports that Hess plans to shut its Port Reading NJ refinery sent RBOB values 5 cents higher in just 5 minutes, ending what had been another quiet overnight trading session.  The plant’s closure is another great example of the dichotomy between refiners in the US – those with access to distressed Canadian and inland US crude are making huge profits, while those without are struggling just to break even.  With today’s move, RBOB is clearly in a technical breakout, and it looks like a test of $3.00 is in the cards.  WTI, after 7 straight weeks of gains, also looks like it is due for a test of $100, while only HO is showing reluctance to rally, with $3.10 remaining the pivotal value this week.

US Equities look poised to continue pushing to new 5 year highs, and potentially all-time highs for both the DJIA and S&P 500 after US Durable goods orders for December also came in nearly 2 times as strong as estimated this morning.  All the elements appear to be in place for the start of a strong rally in energy prices, but some caution is warranted after such a sustained buying spree since early December that at some point, the current overbought condition in equities and commodities will have to be corrected.

CLICK HERE for a PDF of this morning’s charts

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