Energy Prices Recovering

On May 24, 2012 by TradingDesk

Yesterday’s morning meltdown in the Euro/USD – currently trading at its lowest level since July 2010 – pushed stock and commodity prices sharply lower. Stocks staged an impressive comeback in the afternoon, erasing all losses, on hopes that another summit of EU politicians can solve the financial crises. The sentiment has stalled this morning however, as negative manufacturing and GPD reports published in China, Germany, the Eurozone as a whole, and just now the US, with domestic durable goods orders missing expectations for the month. Stocks appear poised to consolidate, as traders seem content to wait and see what the central banks will do.

Energy prices are recovering after making new lows for the year overnight. Headlines point to uncertainty in the talks with Iran as the reason for the bounce, although it seems unlikely that anyone really expected something tangible to come from the meeting. While fundamental – Crude inventories at Cushing hit another record high yesterday, and product demand remains weak – and technical indicators continue to favor lower prices to come, our markets do have a tendency to drift higher ahead of long weekends, and with the massive selling that lead up to this one, we’re likely to see a similar move as traders close out their shorts.

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