Most Signals Are Warning of Higher Energy Prices To Come

On February 19, 2014 by TradingDesk

WTI led yet another rally in energy prices Tuesday, as a combination of technical and fundamental factors helped push several contracts to their highest levels so far in 2014. RBOB gasoline completed its “W” pattern, rallying 25 cents in the past two weeks, and setting the stage for further gains if a traditional spring rally is to take place. ULSD futures also broke through $3.10, and appear near another breakout stage, which could add another 5-10 cents over the next week. Both contracts continue to have signals suggesting they are overbought and due for a correction, but for the time being, most signals are warning of higher prices to come.

Violent protests in Ukraine, Libya and Venezuela, each an important nation for various energy supplies, helped add to the bullish sentiment particularly in Brent and WTI. Natural Gas prices in the US reached a 4-year high, as the country’s infrastructure struggles to keep up with heating demand in a brutal winter – despite record levels of output brought on by the shale gas revolution. While global markets for Nat Gas are dislocated due to the inability to efficiently transport the product overseas – unlike crude oil which is comparatively easy to ship – European markets are weary of their own supply disruptions since much of the continent relies on Russian exports – via the Ukraine – to heat their homes.

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