More Modest Pullbacks

On February 28, 2012 by TradingDesk

Energy prices are pulling back modestly again this morning as warning cries of the economic damage caused by high fuel prices have reached a fever pitch, with many calls for government intervention being made. Given our market’s status as a political and social hot-button, it does seem likely that some action will be taken this year, with the most likely moves to be an increase in margin requirements on the exchange – making it more costly to trade in an effort to limit speculation – and potentially via another release of the Strategic Petroleum Reserve as was done last year during the Libyan conflict.

 

Fundamentally the US market remains amply supplied, and today’s big drop in January durable goods orders suggests that economic weakness is creeping back into the picture. Technically, energy contracts remain in a longer term bull trend targeting last year’s highs, and this week’s move appears to be nothing more than a natural correction to a larger move higher.

 

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