Energy Prices Explode

On August 28, 2013 by TradingDesk

Energy prices exploded yesterday morning on the news that the US is prepared to launch a strike on Syria as soon as Thursday which seemed to take all markets by surprise. RBOB and ULSD convincingly broke through their technical ceilings and settled points off of the day’s highs at 3.0341 and 3.1609, respectively. As equities burned, WTI saw the largest daily gain in almost a year of $3 a barrel and gold settled above $1,400/oz. for the first time since May all of which may be signs of a new era of fear-trading as debt ceiling discussions and QE tapering loom. Higher prices are now expected short term until Syria cools off and Hurricane tensions are relieved. Long term price weakness in the US is spurred on after North America sees its second consecutive year of petroleum demand decline while global demand continues to grow.

Physical prices were mixed Tuesday and only Chicago CBOB (+.1150) saw a move larger than 3 cents in either direction. Travel data showing a broad decline in miles driven by US motorist among the country’s regions offers modest support for weaker physical prices going forward.

It seems that the bulls, that have been mainly silent (asleep) in the month of August, have finally come out to play as they blew through technical resistance levels Tuesday. RBOB and ULSD have been dropped into a sandbox of a range (about 15 cents in depth) between support and resistance levels going forward. The DOE release today may give the bears a reason to stir from their new-found hibernation or lull them further as they start to count sheep.

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