Diesel Futures Hold On To Overnight Weakness
The energy complex is mixed today with diesel futures the only member holding on to overnight weakness, trading 15 points under Friday’s settlement. The prompt month gasoline contract is up around half a cent a gallon while the American crude oil benchmark adds 11 cents per barrel so far this morning.
Demand concerns surrounding the continued rise in COVID cases outside the U.S. seem to have put a damper on last week’s breakout rally in energy prices. Each of the big three U.S. energy contracts broke through multiple resistance levels and appeared to bring price action out of the sideways pattern they’ve been in since March. The ‘we aren’t out of the woods yet’ sentiment seems to be keeping a lid on momentum traders looking to continue the five month rally that started last November.
Money managers seemed content with their WTI and HO positions last week, adding a skosh of net length while speculative positions in RBOB took an 11% haircut. While it would make sense there was some profit-taking with last week’s rally, it’s curious that did not place among all three contracts.
Baker Hughes reported a net increase in active oil production rigs last week, bringing the total active rig count within one platform of the five-year average. The weekly addition of active rigs which started last fall will likely continue as producers look to capitalize on higher oil prices.