Energy Prices Breaking Down Again

On May 30, 2012 by TradingDesk

Tuesday’s big rally in stock and commodity markets was cut short on news that Spain’s debt rating had been downgraded yet again. The negative sentiment picked up overnight, with Asian and European shares selling off sharply, although fresh rumors that the Eurozone would create a “banking union” to help solve the most recent crises, has limited the losses to around 1%. While these rumors are unlikely to provide any real solution to the issues at hand, with the Euro and many global stock markets hitting their lowest levels since the summer of 2010 – when QE2 was announced – speculation on central bank activity will surely reach a fever pitch.

Energy prices are breaking down again, after being unable to hold their gains yesterday morning, with news that China is not planning a large stimulus package wiping out hopes for a rebound in oil demand. WTI has broken below $90, and Brent and HO are hitting their lowest levels of the year. RBOB continues to hold support, but with extreme backwardation in the contract, gasoline values will catch up with the rest of the complex when we roll to the new contract on Friday. Look for $2.70 as the must-hold values in products, otherwise a run to the $2.50 range is in play.

The DOE report will be out tomorrow due to the holiday.

CLICK HERE for a PDF of this morning’s charts


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