Energy Markets Survive Attempted Sell-Off

On October 25, 2013 by TradingDesk

Energy markets survived another attempted sell-off Thursday, with RBOB changing its recent pattern of being the weakest link in the complex, and leading a rally of nearly 4 cents after hitting fresh lows for the year overnight. A fire at Citgo’s refinery in Lemont IL was blamed for much of the move, getting an assist from an oversold technical condition.

The refinery fire also ended the October meltdown in Midwest markets, with Chicago gasoline differentials gaining a dime on top of the futures advance, and Group 3 values rose a nickel. Despite the bounce, charts continue to point to lower prices ahead, with both ULSD and RBOB poised to drop another 15 cents should nearby support finally fail.

Meanwhile, the most volatile market of the year – that for EPA mandated Renewable Identification Numbers (RINs) – continued its dramatic drop, as bets were made that the 2014 obligation for refiners would be reduced. Word is expected in November, although the recent government shutdown may delay that ruling. The drop in values reduces the incentive for US Refiners to export products (exports do not create a renewable obligation, while domestic sales do) which could put further pressure on prices over the winter.

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