Energy Prices Stuck in Neutral

On May 24, 2013 by TradingDesk

Energy futures continued their “Bend-don’t-Break” trading pattern yesterday, as WTI bounced sharply off of its 200 day Moving Average – the purple line below represents the average, which is what many consider to be the Hedge Funds indicator of choice – and refined products wiped out heavy early morning losses. There was not a headline to point to for the bounce, and in terms of timing it appears that for at least one day, energy values decided to take the lead from US stock indices, which also staged a comeback after an early sell-off.

Unfortunately, global markets aren’t faring as well, headlined by extreme volatility in the Japanese Nikkei, which dropped by more than 7% yesterday, then had a wild 1000 point swing today as investors struggle to sort out the central bank’s aggressive policies to break out of a 15-year period of deflation. What is interesting is that a strong durable goods order report in the US (+3.3% for April) has brought on a negative response to futures prices, with several writers already suggesting that any good news is bad for risk assets as it means a faster end to central bank intervention.

For now, energy prices remain stuck in neutral, with a slight bias to the downside on the charts. With volumes light as traders prepare for a long weekend, don’t expect any major moves today unless some event shocks the market back into a trend.

CLICK HERE for a PDF of today’s charts

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