Too Early to Call for an End to the Spring Rally in Prices

On February 27, 2013 by TradingDesk

Refined product futures sold off heavily Tuesday, ignoring a bounce in US equities, in what appeared to be technical follow through on Monday’s big “outside down” reversal pattern. Prices did attempt to stage a rally when Ben Bernanke testified before congress, suggesting to some that the FED was not yet ready to end its 4-year long run of stimulus, but the selling picked up again in the afternoon, leaving RBOB, HO along with WTI and Brent at their lowest levels in a month. We won’t know until the CFTC reports on positions Friday afternoon, but given the heavy volumes involved in the past two days of selling, it does appear that some of the record-high length among “Non-Commercial” traders (hedge funds and other money managers) may be pulling out of the energy market for now. Rumors were swirling that an energy-focused hedge fund was going out of business, but those same rumors were present during last week’s selloff and nothing yet has materialized.

It is still too early to call for an end to the spring rally in prices, for gasoline in particular which will be 20 cents higher once we roll to the low RVP April contract on Friday, but the 20 cent drop in cash prices this past week should finally provide a brief respite to consumers.

CLICK HERE for a PDF of today’s chart

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