Energy Prices Poised For Loss

‘Profit taking’ and ‘short covering’ seem to be the preferred terms to describe market action this week, and this morning is no different. The four mainstays of the energy complex are up around 1-1.5% so far to start this morning and ‘short covering’ after the prior two days of losses is taking credit for the move. Regardless, energy prices are poised for loss on the week.

The global prevalence of the American crude oil benchmark over other grades seems to be increasing as WTI exports in 2018 remain higher than they have ever been. With the increase in world-wide fundamental relevance and the CME group’s creation of a Houston-based futures contract, traded volumes of US crude oil instruments are expected to continue increasing, potentially increasing volatility as well.

The RBOB futures’ charts paint a fairly bearish picture in the short term. After falling through nearly all support levels so far this month, gasoline prices are facing another turning point around the $1.91 level, just 50 points below where it’s trading currently. If broken, prices have nothing but space until the $1.80 mark which they will likely fall to.

ULSD futures aren’t on the same precipice but are trading more in the middle of their technical range, surrounded by resistance and support levels at $2.35 and $2.26 respectively.

Since headline market drivers tend to get lost in the shuffle of news cycles, here’s a quick recap of the major factors moving prices:

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