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Energy Complex Bouncing For Second Day

Friday, Aug 9 2019
Market Talk

The energy complex is bouncing for a second day so far this morning. Gas and diesel both posted 2+ cent gains yesterday and seem content to do the same today. As admirable as the rally seems, both contracts have almost a dime to go if they want to reverse this week’s losses.

Production concerns arising out of the majority of shale basins helped fuel the buying pressure seen over the past couple days. While the possible shortage of future crude supplies might seem like a pressing issue worthy of fear-based buying, the fact that oil production has set several new all-time highs in 2019 might keep the bulls at bay.

Despite the 2-day bounce in petroleum futures, lackluster demand growth concerns, posited first by the EIA (Energy Information Administration) then by the IEA (International Energy Agency), still overshadow prices going forward. Regardless of momentum, or reversal thereof, commodities tend to lose their value if no one wants to buy them.

Refined product charts look to be on the precipice: both RBOB and HO prompt month futures are staring down their 200-week moving averages, one of the last technical bastions keeping both contracts from seeing further downward action. $1.65 seems to be the threshold to beat for RBOB prices with $1.30 as the prize if broken. HO has a similar story if not muted with $1.72 as the next support level to break, a price not seen since December of last year, which could possibly lead to the mid $1.60s.

CLICK HERE for a PDF of today's charts

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