Market Swings Add Confusion

On August 22, 2013 by TradingDesk

The FED’s July FOMC meeting minutes disappointed US stock markets Wednesday, as it now appears that all members of the committee favor cutting back stimulus programs, although no one seems to agree on when that should happen. The selling in stocks snuffed out another rally in refined products which had initially bounced following a large draw in gasoline stocks reported by the DOE.

Brent crude has pulled back below $110/barrel as one of Libya’s smaller oil ports opened for business, although its two largest facilities remain shut for a fourth week by protesters. Egyptian fighting has also seemed to cool in the past 48 hours, limiting the upside pressure on crude due to supply disruptions. The premium for Brent vs. WTI crude continued to widen, despite the fact that crude stocks in Cushing OK have dropped by 25% in the past two months according to DOE statistics, following news that a pipeline flowing into the hub was restarted for the first time in a year. This spread remains one of the most important factors in physical product markets, due to its impact on regional refining economics, and these latest swings add more confusion to what is already a mixed outlook for RBOB and ULSD.

ULSD futures continue to have a modestly bullish outlook, with $3.10 remaining the key pivot point. RBOB is stuck in neutral in a range between $2.90 and $3.

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Market Update

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