Energy Futures Moving Modestly Lower

On November 19, 2013 by TradingDesk

Energy futures are moving modestly lower today, in what has been a quiet start to the week so far. There have been few headlines to move prices so far, so many are pointing to the resumption of talks between Iran and a host of nations over its nuclear programs as the cause for the weaker prices. Meanwhile, gathering far less attention in the media, but potentially significant for oil markets, are reports that Saudi Arabia – alleged to be furious with the new found “cooperation” between the US and Iran – is working on contingency plans with its old foe Israel on how to respond to the Iranian nuclear threat. While this type of saber rattling is fairly common in the region, there is no mistaking that any actual action would cause a very sudden spike in oil prices.

Technical indicators remain conflicting. WTI is on the cusp of a major selloff, while Brent, RBOB and ULSD futures all appear to be stuck in neutral at the moment. ULSD is in a range between $3 and the low $2.80 range, while RBOB must break out of a wider range from $2.50-$2.70 before finding further direction. Without any fundamental news to move energy prices, US equities may have a stronger influence this week. The big story in stocks is that both the S&P 500 and DJIA broke to new record highs yesterday, before selling off quickly when a major fund manager cautioned markets about future direction. If equity markets face a significant correction, it may be enough to drag energy prices to new lows, while a year-end rally may be enough to push prices through resistance.

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