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: Crude oil prices look to be back under some pressure this morning as demand expectations are pinched due to fresh double-dip recession talk. We also think that demand expectations for physical commodities are reduced by the news of additional austerity measures from Spain and the UK overnight. Furthermore, physical commodity markets seemed to have lost the bullish buzz from the Chinese currency change yesterday and that would seem to leave the outside market influence negative for energy prices into the US Tuesday trade. A tenable physical supply and demand balance in energies was also confirmed by Goldman Sachs as they slashed their 3-month price outlook for crude by 9.0% (from the June 4th forecast). Furthermore, ABARE only expects WTI crude to average $74 in 2010 and with nearby futures prices sitting above that level into the opening today, there would seem to be more bearish views in place than bullish views today. Since the market garnered some support from talk of a sustained ban in deep water drilling earlier this month, it is possible that predictions from BP that deep water drilling can be done safely with improved technology, could be seen as a negative. However, faith and stock in BP is probably running very low and therefore the call for deep water activity is probably discounted. In the end, even technical price action has turned negative for August crude oil after a bearish reversal and the test of $80 yesterday. Monday’s weak close and range down action this morning casts a bearish bias and that could set the stage for a slide down to $78.86 or even lower if equity market losses become more significant.
GASOLINE: The RBOB market is clearly in a slight technical breakdown on the charts this morning and that action is mirrored by a mostly slack macro economic outlook. Talk of government spending cuts slowing global growth and therefore energy consumption is only partially countervailed this morning by talk that the US administration might be considering more aggressive sanctions against Iranian refiners. However, threats against product supply probably aren’t going to be enough counter overall weaker demand expectations today. While the US energy department reported average retail gasoline prices to be up 4.2% in the last week to $2.74/gallon that report might not have much of an impact on gasoline futures prices today. The EPA did delay a decision on implementing more ethanol in the US gas chain and that could eventually be seen as a supportive development for RBOB. In the end, the technical failure this morning looks to push August RBOB temporarily below the $2.10 level.
HEATING OIL: The heating oil market is showing signs of following crude and RBOB prices downward in the early going today, but as of this writing, the August heating oil contract hadn’t really seen much technical damage on its charts. With talk of rising refinery capacity in Brazil out to 2020, seen in the news overnight, the bear camp seems to have the advantage of the headlines. However, increased refinery capacity in Brazil is a long term potential and therefore that story is probably nothing more than negative psychology for the market today. Initial downside targeting is seen at $2.1172 basis the August heating oil contract with the magnitude of the coming break expected to be a function of the negative sentiment being thrown off by the equity markets.
TODAY’S ENERGY MARKET GUIDANCE: Renewed demand fears and an overbought condition leaves the bear camp with the edge today.
Energy Market Commentary – 2010.06.22
by Dave Hightower on June 22, 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: Crude oil prices look to be back under some pressure this morning as demand expectations are pinched due to fresh double-dip recession talk. We also think that demand expectations for physical commodities are reduced by the news of additional austerity measures from Spain and the UK overnight. Furthermore, physical commodity markets seemed to have lost the bullish buzz from the Chinese currency change yesterday and that would seem to leave the outside market influence negative for energy prices into the US Tuesday trade. A tenable physical supply and demand balance in energies was also confirmed by Goldman Sachs as they slashed their 3-month price outlook for crude by 9.0% (from the June 4th forecast). Furthermore, ABARE only expects WTI crude to average $74 in 2010 and with nearby futures prices sitting above that level into the opening today, there would seem to be more bearish views in place than bullish views today. Since the market garnered some support from talk of a sustained ban in deep water drilling earlier this month, it is possible that predictions from BP that deep water drilling can be done safely with improved technology, could be seen as a negative. However, faith and stock in BP is probably running very low and therefore the call for deep water activity is probably discounted. In the end, even technical price action has turned negative for August crude oil after a bearish reversal and the test of $80 yesterday. Monday’s weak close and range down action this morning casts a bearish bias and that could set the stage for a slide down to $78.86 or even lower if equity market losses become more significant.
GASOLINE: The RBOB market is clearly in a slight technical breakdown on the charts this morning and that action is mirrored by a mostly slack macro economic outlook. Talk of government spending cuts slowing global growth and therefore energy consumption is only partially countervailed this morning by talk that the US administration might be considering more aggressive sanctions against Iranian refiners. However, threats against product supply probably aren’t going to be enough counter overall weaker demand expectations today. While the US energy department reported average retail gasoline prices to be up 4.2% in the last week to $2.74/gallon that report might not have much of an impact on gasoline futures prices today. The EPA did delay a decision on implementing more ethanol in the US gas chain and that could eventually be seen as a supportive development for RBOB. In the end, the technical failure this morning looks to push August RBOB temporarily below the $2.10 level.
HEATING OIL: The heating oil market is showing signs of following crude and RBOB prices downward in the early going today, but as of this writing, the August heating oil contract hadn’t really seen much technical damage on its charts. With talk of rising refinery capacity in Brazil out to 2020, seen in the news overnight, the bear camp seems to have the advantage of the headlines. However, increased refinery capacity in Brazil is a long term potential and therefore that story is probably nothing more than negative psychology for the market today. Initial downside targeting is seen at $2.1172 basis the August heating oil contract with the magnitude of the coming break expected to be a function of the negative sentiment being thrown off by the equity markets.
TODAY’S ENERGY MARKET GUIDANCE: Renewed demand fears and an overbought condition leaves the bear camp with the edge today.
Tags: Crude Oil, Energy, Gasoline, Heating Oil, RBOB
About Dave Hightower