Modest Sell-Off Across the Globe

On July 24, 2013 by TradingDesk

A contraction in Chinese manufacturing data has sparked a modest sell-off in commodities and equities across the globe this morning. News that Euro-Zone PMI’s had moved back into positive territory has done little to stop the downward momentum so far, as China remains the engine of global growth, and has fallen far from decades of 12% annual gains. The selling has not reached 1% however, suggesting this is more of a correction than a reversal of the recent uptrend.

For refined products, $3 remains the pivotal mark to the downside. With RBOB down a dime since Friday, look for it to be the leader this week if prices are to end the summer rally. The DOE report today is expected to show gains in refined product inventories, and another draw down in crude, as refiners continue to run near record rates. Charts have pulled back from their bullish stance, making the reaction to a test of $3 all the more important.

The tropical wave that formed off the coast of Africa Monday has been upgraded, and now is given a 40% chance of developing into a storm over the next two days, and could be gaining strength in the Caribbean by early next week. Although this system has a long way to go before becoming a potential threat to production and refining assets, we are entering the 2-3 month period when African storms will be formed every week or two and keep the energy market on its toes.

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