Refined Products Continue To Push Into The Green

On April 14, 2014 by TradingDesk

Refined products continue to push into the green this morning, extending an impressive run that has added 20 cents to RBOB and a dime to ULSD values since April 2nd. Although 8 sessions of buying have left both contract in “overbought” territory on charts – leaving them susceptible to a corrective selloff this week – the technical outlook has changed drastically from 2 weeks ago when prices were on the edge of a major sell-off.

A handful of minor refinery issues along the East Coast of the US and Canada have aided in the price action over the past week, and have helped energy prices decouple from plunging US Equities. ULSD will face a major test at the $3 range, where both its 100 and 200 day moving averages converge, while RBOB needs to get the June contract above that same level to sustain this latest rally.

Speculators increased their net long positions in WTI and Brent last week, as dropping Cushing OK crude stocks and fresh tensions in the Ukraine seem to have given confidence to those betting on higher oil prices. Refined product length was reduced (and in the case of ULSD non-commercials, the net short position increased) somewhat counterintuitively to the move in crude and in prices for the week. In terms of speculative money, it seems that there is a strong bet being placed that higher oil prices and lower refined product prices will begin to squeeze refinery margins.

CLICK HERE for a PDF of today’s charts

Market Update (3)

Charts of the Commitments of Traders report:

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