Is the Spring Rally On Its Way?

On January 23, 2013 by TradingDesk

It’s another mixed day for energy futures, as RBOB tries to drag HO and WTI out of the red following a report that PBF had to shut several units at its Delaware city refinery for unplanned repairs. Although HO failed again to hold at $3.08, WTI did finally get some follow through buying Tuesday after the governor of Nebraska approved a new route for the Keystone XL pipeline which should help alleviate the glut of land-locked crude across the US and Canada. The US State Department said it would wait until March to make a final decision on allowing the project to commence. While the project seems like a no-brainer to many in the industry, US railroads have been the largest beneficiary of the lack of pipeline space over the past 2 years, and with a famous white-house advisor overseeing the largest such company, it will be interesting to see how the story plays out this spring.

Technical indicators continue to point to higher prices, but caution that RBOB may have outkicked its coverage during the past week’s 10-cent rally and a pullback is due. With US equity indices continuing to push to new 5 year highs, it does seem that the foundation for a spring rally is in place, despite weak supply & demand fundamentals.

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