A Week of Volatility

On May 31, 2013 by TradingDesk

The DOE report released Thursday showed builds in crude and ULSD stocks, but a pre-Memorial-Day boost in gasoline demand drew those inventories lower. The report appeared to catch the market off-guard as a 4 cent loss in RBOB was quickly reversed and the contract finished in the green. ULSD futures attempted to rally in sympathy, but the buying stalled out early afternoon and diesel values slipped lower yet again, completely wiping out Tuesday’s large gains. Despite the volatility, both contracts remain firmly range-bound with technical studies giving slight favor to lower prices as we enter June.

The bright spot of the DOE report was that US production of crude oil continued to increase, and now stands at its highest level in more than 20 years. Unfortunately for consumers, as is shown in the chart below, that increased production has had little impact on prices so far. Meanwhile, US refiners are now importing nearly 1 million barrels per day less oil than they were just a year ago, and OPEC has announced that it is maintaining its production quota, so crude fundamentals appear to favor lower prices going forward as well.

CLICK HERE for a PDF of today’s charts


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