Energy Prices Surge On Fear

On December 27, 2012 by TradingDesk

Energy prices surged higher Wednesday, shrugging off a 3rd straight day of selling in US equities, as a fear premium returned to the markets after news of Iranian naval exercises being planned in the Straits of Hormuz, and the arrests of several terrorists in the United Arab Emirates – an important oil exporter and ally to the US – who were planning attacks on oil infrastructure. RBOB led the move higher, settling up 6.5 cents on the day, but may have outkicked its coverage just slightly as it is the only contract in the red this morning.

Technical studies continue to favor higher prices, with both WTI and RBOB on the verge of a major breakout to the upside, while HO is trailing and still has heavy resistance ahead. The fundamental picture is exactly the opposite, gasoline and crude inventories are near record highs for this time of the year in many markets – due to many refiners running their plants at maximum levels, to cash in on strong cracking margins despite sluggish demand – whereas diesel stocks are at their lowest levels in over 5 years. The DOE report should create some volatility at 10am central today, but don’t expect a new trend to form before year end.

CLICK HERE for a PDF of this morning’s charts

Comments are closed.