Energy Prices Surge

On November 19, 2012 by TradingDesk

Energy prices are surging to start the week, supported by escalating violence in Gaza, and by a bounce in equities, which in the US are recovering from their lowest levels since June after optimistic statements from congress on the likelihood of avoiding the “Fiscal Cliff”. European Gasoil is leading the rally, currently up nearly 3%, doubling the gains of the other contracts, in what appears to be a technical breakout after 3 weeks of stagnation. HO is rallying in sympathy, while gasoline grades are lagging after the last 2 refineries shuttered by Sandy announced their plans to restart.

Both HO and RBOB are currently threatening their first layer of technical resistance, although speculative interest shrunk again in the past week, extending the longest drawdown in commodity bets by hedge funds in several years. If products can break above their November highs, there is a case to be made for a 20+ cent rally for each. If the buyers dry up however, an equal move to the downside should be expected.

CLICK HERE for a PDF of this morning’s charts

 

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