Energy Futures Slipping into the Red

On February 28, 2014 by TradingDesk

Energy futures are slipping into the red again today, following the S&P 500 (which settled at a record high yesterday) lower after US GDP for the 4th quarter was revised nearly 1/3 lower from earlier estimates. Fittingly, both RBOB and ULSD have now given up a third of their February gains over the past week, and have transitioned from decidedly bullish a week ago to neutral/bearish territory today.

The expiring March futures contract will create major changes however, as April RBOB will open trade Monday 20 cents above prompt levels (due to RVP requirements) while April ULSD stands 8 cents below prompt values, due to the lingering effects of the supply squeeze along the East Coast. These transitions cause distortions in continuation charts and will leave both contracts in limbo to begin the month of March. Support at $3 has broken down for both products in all remaining trading months, and if we are able to settle below that level today, slight favor will be given to the bears.

Political turmoil continues to threaten market activity, as violence in the Ukraine escalates and protests in Venezuela continue. Likewise, regulatory turmoil remains as the FED extended its comment period yesterday to gather input on how it should (or should not) allow major banks to participate in commodity markets. These unknowns are likely to influence prices for months to come.

CLICK HERE for a PDF of today’s chart

Market Update (3)

Comments are closed.