Crude Pushed to Lowest Closing Since July

On September 24, 2013 by TradingDesk

A combination of weak technical and fundamental influences pushed crude oil to its lowest closing values since July Monday, and RBOB made fresh lows for the year. The sell-off continued overnight, although news of a fire at Marathon’s Galveston Bay refinery (formerly known as the beleaguered BP Texas City plant) has staunched the move in gasoline for the moment. $100 for WTI will become a major pivot point to the downside, with RBOB aiming for its 2012 lows in the $2.53 range, and ULSD trying to hold above $2.90 to prevent a slide to $2.70.

Assuming that Middle East tensions don’t flare up again (always a possibility) the energy market appears to be entering at least a short-term bear market. The key question this week – which won’t be answered until Friday – is if the most recent slide in prices has forced more liquidation in what was a record net-long position in WTI and Brent crude by the speculative community which includes hedge funds and major banks. If that money heads for the exits, the 15 cent drop in products over the past week may seem tame in comparison of what’s to come.

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