RBOB and ULSD Manage Late Day Rally

On December 20, 2013 by TradingDesk

Refined product futures now stand 10 cents above before the DOE report Wednesday morning, as both RBOB and ULSD managed a late day rally Thursday to approach highs for the month. A handful of small refinery issues have helped the futures prices, while prompt gasoline prices in the Group 3 and Chicago spot markets have increased by more than 20 cents in the same time. Futures are now bumping up against the top end of their trading ranges, and could start 2014 with large gains if resistance breaks down. That said, we’ve been at these same levels 3 times over the past month, and each time we’ve pulled back by at least 10 cents.

US GDP increased by 4.1% in the 3rd quarter, the fastest rise in 2 years. Bulls will suggest that this number means there will be more demand for fuel as the economy grows, while bears will argue this is just another reason for the FED to end its QE programs. The API released a report yesterday that favors the bulls, as total petroleum deliveries increased by nearly 5% compared to a year ago. We’ll have wait and see who wins the argument, but with 2 weeks of abbreviated trade ahead, there may not be much of an audience to hear it.

There has been no progress in the Libyan port drama or with French refinery strikes (which were reported to end earlier this week only to expand by today) which could be enough to keep prices elevated through the end of the year.

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