Middle East Violence Sends Energy Prices Higher

On October 29, 2013 by TradingDesk

Middle East violence sent energy prices higher Monday, with news that a major Libyan port had been shut the most significant headline of the day. Overnight, reports surfaced that the crude export facility had not been shut, and prices gave back roughly half of yesterday’s gains. Despite the bounce yesterday, WTI, Brent, RBOB and ULSD all remain in their bearish trends, which suggests more selling if this latest drama quiets down.

The CFTC is still working to get back on schedule with its Commitments of Traders report, with the most recent data only through October 1st, but it does show that speculators continue to trim their long-bets in WTI and RBOB and are – or at least were 3 weeks ago – now net-short on ULSD futures. Brent net-longs held by money managers remain high historically, but are dropping from the summer’s record highs.

The FED will take center stage again, as it begins its 2 day FOMC meeting today. Just like a month ago, the focus is on whether or not to cut back on pumping liquidity into financial markets. For energy prices, any sign of tapering should add to the bearish sentiment, while no change should push us higher short term.

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