Refined Product Futures Selling Off Modestly

On February 27, 2014 by TradingDesk

Refined product futures are selling off modestly this morning, following the lead of Brent crude and global stock markets that are reacting negatively to escalating violence in the Ukraine, and a subsequent drop in the Euro.

WTI is holding flat at the moment, reducing its discount to Brent crude to the lowest level in 6 months, as domestic markets continue to see-saw over the Keystone pipeline debate and new “emergency” regulations on rail shipments that threaten jail time for shippers who fail to classify crude cargoes correctly.

The selling in energy futures so far this week, while modest relative to the preceding run-up in prices, has changed the technical outlook as we look towards March trading. RBOB has more sell signals appearing, while ULSD is shifting to a neutral mode after weeks of strong bullish signals.

The DOE report showed little change in the country’s energy stockpiles, as the pattern of sluggish demand (near 5 year lows for both gasoline and diesel) compared to high refinery production was once again balanced out by exports of refined products. As we head into spring, a major question will whether rising tensions in country’s from South America to Asia will have more of a negative impact on supplies, or demand.

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