Energy Futures Continuing to Slide

On March 20, 2014 by TradingDesk

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.

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