Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
CRUDE OIL MARKET FUNDAMENTALS: Outside factors seem balanced to begin today, as the US equity market has apparently recovered from late afternoon weakness seen in the US on Tuesday. Central bankers’ comments that they would continue to invest in the Euro currency was also seen as a positive to risk taking sentiment overnight but there continues to be an air of uncertainty in the marketplace. The effects of the BP Gulf oil spill are beginning to spread on other related energy companies, which were the leaders to the downside during Tuesday’s initial equity market sell off and that suggests the oil spill is weighing on investor and consumer sentiment. World markets have begun to highlight China’s footprint on energy demand, with the latest spread between Dubai and Brent crude oil trading at a premium and that could suggest that Asian buying is set to favor Angola and Brazilian crude. This week’s EIA report has been delayed 1-day due to the Memorial Day holiday and that might spare the bull camp another negative reading from the supply front. With crude oil putting in a weak performance Tuesday, after failing to hold early gains and ending quite weak, we have to leave the edge with the bear camp. The intermediate term trend off of the May highs is still down, and it could take very strong US equity market gains to send July crude oil back above the $72.50 level. Key resistance comes in at last weeks highs of $75.72 and that level could become a key lynch pin for any meaningful rally. Trading volumes remain light and below average and that would also seem to favor a continued back and fill type of trade
PRODUCT MARKET FUNDAMENTALS: GASOLINE: EIA’s recent weekly survey on average retail gas prices at the pump fell another $0.058 cents to a 3-month low of $2.73/gallon, but that is mostly catch up action. With the decline in gasoline prices bucking the typical seasonal pattern, it is clear that abundant supplies, weaker crude prices and fear of slowing off the euro zone are still giving the bear camp the edge. US refinery margins are expected to be lower due to a decline in product prices and while that might eventually be bullish for gasoline we don’t see the fundamental case to avoid another return to the $1.90 price level. In fact, RBOB made had a short term breakout to the upside early Tuesday, but was unable to sustain that move and then the market ended quite negative with an outside day down bear reversal.
HEATING OIL: While the July heating oil contract has managed to hold above the prior session’s lows in the early trade today, it is difficult to come away with a positive technical view from the charts. While initially higher US equity market action might lend a hand to the bull camp, this market is still being confronted with a mountain of supply and ongoing concerns of sagging global demand. It does appear as if the $1.95 level offers up some measure of technical support, but it will take a conclusive wave of outside market optimism to see prices return to resistance up at $2.0171.
TODAY’S ENERGY MARKET GUIDANCE: A temporary bounce might be seen off the initial favorable action in the equity markets but we are not sure the market is poised to see an all clear from the macro economic front. In short, we expect minimal short covering action to run its course, with the afternoon equity market action the real focal point of the energy trade.
Energy Market Commentary – 2010.06.02
by Dave Hightower on June 2, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
CRUDE OIL MARKET FUNDAMENTALS: Outside factors seem balanced to begin today, as the US equity market has apparently recovered from late afternoon weakness seen in the US on Tuesday. Central bankers’ comments that they would continue to invest in the Euro currency was also seen as a positive to risk taking sentiment overnight but there continues to be an air of uncertainty in the marketplace. The effects of the BP Gulf oil spill are beginning to spread on other related energy companies, which were the leaders to the downside during Tuesday’s initial equity market sell off and that suggests the oil spill is weighing on investor and consumer sentiment. World markets have begun to highlight China’s footprint on energy demand, with the latest spread between Dubai and Brent crude oil trading at a premium and that could suggest that Asian buying is set to favor Angola and Brazilian crude. This week’s EIA report has been delayed 1-day due to the Memorial Day holiday and that might spare the bull camp another negative reading from the supply front. With crude oil putting in a weak performance Tuesday, after failing to hold early gains and ending quite weak, we have to leave the edge with the bear camp. The intermediate term trend off of the May highs is still down, and it could take very strong US equity market gains to send July crude oil back above the $72.50 level. Key resistance comes in at last weeks highs of $75.72 and that level could become a key lynch pin for any meaningful rally. Trading volumes remain light and below average and that would also seem to favor a continued back and fill type of trade
PRODUCT MARKET FUNDAMENTALS: GASOLINE: EIA’s recent weekly survey on average retail gas prices at the pump fell another $0.058 cents to a 3-month low of $2.73/gallon, but that is mostly catch up action. With the decline in gasoline prices bucking the typical seasonal pattern, it is clear that abundant supplies, weaker crude prices and fear of slowing off the euro zone are still giving the bear camp the edge. US refinery margins are expected to be lower due to a decline in product prices and while that might eventually be bullish for gasoline we don’t see the fundamental case to avoid another return to the $1.90 price level. In fact, RBOB made had a short term breakout to the upside early Tuesday, but was unable to sustain that move and then the market ended quite negative with an outside day down bear reversal.
HEATING OIL: While the July heating oil contract has managed to hold above the prior session’s lows in the early trade today, it is difficult to come away with a positive technical view from the charts. While initially higher US equity market action might lend a hand to the bull camp, this market is still being confronted with a mountain of supply and ongoing concerns of sagging global demand. It does appear as if the $1.95 level offers up some measure of technical support, but it will take a conclusive wave of outside market optimism to see prices return to resistance up at $2.0171.
TODAY’S ENERGY MARKET GUIDANCE: A temporary bounce might be seen off the initial favorable action in the equity markets but we are not sure the market is poised to see an all clear from the macro economic front. In short, we expect minimal short covering action to run its course, with the afternoon equity market action the real focal point of the energy trade.
Tags: Crude, Energy, Gasoline, Heating Oil, RBOB
About Dave Hightower