Prices Stage an Impressive Comeback

On September 25, 2013 by TradingDesk

It appeared that energy prices were on the verge of a major melt-down this week, until operating issues at a handful of refineries – including the 2 largest in the US – and a cold shoulder from the new Iranian president at the UN assembly helped prices stage an impressive comeback. ULSD futures are up 7 cents from yesterday’s lows, and RBOB prices are up almost a dime. Technical indicators suggested both markets were due for a bounce, so we’ll need to wait and see if this latest pop is simply a correction in a larger bearish move, or the end of the selling for 2013. $3 will become a major pivot-point for ULSD, and $2.70 for RBOB. Both levels were tested overnight, and so far have held resistance.

Today’s DOE report will be watched closely to determine if plunging margins, particularly for gasoline, have forced refiners to cut their run rates, which had been at historically high levels. With global demand still sluggish, and technical hinting that more selling is due once this bounce runs out of steam, economic run cuts may be the best hope for the bulls.

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