Overnight Price Rally Wiped Out

On December 19, 2013 by TradingDesk

RBOB and ULSD futures increased by a nickel after yesterday’s DOE report that showed a spike in demand estimates, and a drop in refinery runs. The table was set for a major push higher, when the FOMC announced that while it would decelerate its quantitative easing (it will now buy $75 billion worth of assets each month instead of $85 billion per month) it would also hold interest rates at record lows for longer than previously planned. US Equities surged on the “Sugar Coated Taper” news, since it seemed that the FED was sending a clear signal that it was merely tapping the brakes, not turning the car around. Energy prices once again shrugged off the move however, and ended the day with only the DOE-induced gains.

Prices attempted to rally overnight, but that move has been wiped out in the past 20 minutes, leaving energy futures stuck in their trading ranges. If the FED announcement wasn’t enough to push energy values through resistance levels to the upside, there appears little else technically or fundamentally that will be able to do it in the near term.

DOE Charts Below: It’s important to note that while the DOE compiles data from all participants in the industry to gauge supplies, its only mechanism for calculating demand is to estimate the number based on the changes in supply, which causes significant volatility in the weekly figures. For this reason, many analysts rely on a 4-week average of the estimate to smooth out the figures.

CLICK HERE for a PDF of today’s charts

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