Uncertainty Hanging Over Equities and Energy

On February 3, 2014 by TradingDesk

A general sense of uncertainty seems to be hanging over financial markets as trading begins for the 2nd month of the year. Global equities are facing further losses, after a tumultuous January, with concerns over emerging market currencies and (a lack of) Chinese economic growth grabbing most of the headlines. Energy markets are stuck debating whether or not the US will finally approve the northern leg of the Keystone XL pipeline, after a report from the US state department used a lot of words to say very little, and left the white house with few reasons not to let the project move forward. That said, it appears that a lengthy “public comment” period will now follow, and any actual progress remains months away.

ULSD futures are starting out 23 cents below where they left off Friday, after a wild day for the expiring February contract saw 15 cents gains at 1pm, only to drop by 14 cents in the last 30 minutes of its existence. The volatility in inter-month spreads has left a mess of the charts, and a neutral outlook near term. Investors did pour money into ULSD (and crude) futures last week, trimming the net short position of the non-commercial trading group. RBOB meanwhile looks like it has more room to fall, even though we are officially entering the window for a spring rally in gasoline prices. Investors reduced their bets on higher prices last week, but need to be watched closely going forward, as the seasonal long gasoline is typically a very popular (and crowded) trade. If the typical spring rally is to take place in 2014, the managed money class of traders is likely to jump on board early and often.

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Market Update

HO non comHO managedRBOB non comRBOB non comWTI non comWTI managedbrent managed


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