Tag Archives: Crude

Energy: Lower Track This Morning; Looking Outside For Direction

by on January 20, 2012

Below is a sample of The Hightower Report’s 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: March crude oil prices traded down to a new 3-session low during the initial morning hours, which leaves this week’s high of $102.24 as resistance. Early weakness in the crude oil market comes from a rally in the US dollar and slight weakening trend in US equity markets. There appears to be fresh concerns regarding European demand following reports that Swiss refiner Petroplus was putting one of its 5 refineries up for sale, with the prospect of selling two more. The market also appears to have an interest in debt swap talks in Greece, which so far has been a slow and tedious process especially since bondholders are expected to take more than a 60% loss on their investment. Meanwhile, weakness this morning could be tempered by expectations that EU leaders will reach an agreement on an embargo of Iranian oil as early Monday. Recent price action in March crude oil could be seen as a bearish victory in the wake of yesterday’s unexpected crude inventory draw. EIA crude stocks fell 3.438 million barrels, quite different than expectations for a 2.0 million barrel build. While some traders viewed the large 3.7 million barrel gasoline build and fall in demand seemed to offset the large crude inventory decline. EIA crude stocks are 4.52 million barrels below year ago levels but stand 9.09 million barrels above the five year average. One of the key factors behind the surprisingly large draw came from a sharp fall in crude oil imports for the week, down to 8.265 million barrels per day from 9.907 million barrels the previous week. The refinery operating rate was down 1.9% to 83.7%, which compares to 83.0% last year and the five year average of 83.7%. The drop in the refinery rate was partially seasonal as operations begin to prepare for seasonal maintenance. The intermediate price trend continues to favor the bear camp, with downside targeting $98.50. Swing high resistance stands at $103.19.

PRODUCT MARKET FUNDAMENTALS: GASOLINE: March RBOB prices trended lower throughout the overnight and early morning hours as they remained inside of yesterday’s range. It appears that the market is digesting yesterday’s unexpectedly large inventory build in the face of the Hovensa refinery closure. Prices took yesterday’s EIA data that showed a 3.717 million barrels decline in gasoline stocks hard. Current inventory levels are 150,000 barrels below last year but 4.274 million above the five year average. The other negative factor in yesterday’s report was the fall in average total gasoline demand for the past four weeks, which was down 6.1% compared to last year. Gasoline imports came in at 553,000 barrels per day compared to 444,000 barrels the previous week. This week’s price action and advance to the highest level since August 2nd keeps the bull camp in charge. However, further weakness this morning below $2.8097 would be a negative.

HEATING OIL: March heating oil continued to hover around the 200 day moving average during the overnight session ($3.0372), and it also remains trapped inside of yesterday’s range. Prices broke down yesterday in response to EIA inventory data that showed continued weakness in distillate demand. While the weekly stocks figures showed a smaller than expected build of 438,000 barrels, demand from an abnormally warm winter hangs over the market. EIA distillate stocks stand 17.796 million barrels below last year but 189,000 above the five year average. Distillate imports came in at 219,000 barrels per day compared to 163,000 barrels the previous week. Average total distillate demand for the past four weeks was down 4.43% compared to last year. EIA Heating oil stocks fell 2.263 million barrels last week, but the 33.308 million barrel reading is the lowest for this week since 2008. The breakdown in March heating oil prices from last week’s high of $3.1286 continues to respect downtrend channel resistance at $3.0445. The short term price trend favors the bear camp, with targeting below at $2.9580.

TODAY’S ENERGY MARKET GUIDANCE: The crude oil complex has taken a lower track this morning and continues to look to the outside market for direction. The fundamental backdrop is a slight negative for the complex, but geopolitical risks (Iran) and recent boost in risk appetites offer support. February crude oil expires today, and that could be a factor injects an added level of volatility.

Energy: Supported Off Geopolitical and Macro Econ Events

by on January 3, 2012

Below is a sample of The Hightower Report’s 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: While crude oil might be held back by last week’s US inventory readings, the combination of a risk-on vibe and ongoing Iranian saber rattling leaves the bull camp with the edge to start today. In fact, with February crude oil threatening the highest price levels since early December in the early going today, the bull camp looks to have the advantage of the headlines. With Iran calling for the absence of foreign forces in the Gulf and the US apparently signing into law new more specific sanctions against Iran over the weekend, the battle lines appear to be drawn between the two verbal combatants. With the addition of favorable Chinese PMI data and potentially dovish dialogue from Chinese officials, the bull camp would appear to have the fundamental edge to start the holiday shortened week. With supportive currency market action and noted gains in US equities, crude oil and other physical commodity markets are likely to attempt to add to their initial gains. While the EIA crude oil stocks report last week showed an unexpected build, current supplies are still 11.947 million barrels below year ago levels. Part of the build last week came from a notable increase in imports on the week, which jumped to a rate of 8.99 million barrels per day. Another reason for the recent build of crude oil stocks might have come from the closure of the US Houston Channel. The Commitments of Traders Futures and Options report as of December 27th for Crude Oil showed Non-Commercial traders were net long 210,278 contracts, an increase of 5,300 contracts. The Commercial traders were net short 228,605 contracts, an increase of 5,282 contracts. The Non-reportable traders were net long 18,327 contracts, a decrease of 19 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 228,605 contracts. This represents an increase of 5,281 contracts in the net long position held by these traders. We see a very critical pivot point on the charts up at $101.77 in February crude oil, with important support pegged just below the market this morning at 101.05. The bulls have the edge but macro economic information has to stay definitively positive, to actually engineer a sustained upside breakout.

PRODUCT MARKET FUNDAMENTALS: GASOLINE: February RBOB prices have also started the new trading week in a positive track, with prices reaching the highest level since November 9th. It goes without saying that gasoline prices are garnering some support from fears of conflict in the Middle East, but the bulls have added resolve because of a favorable macro economic condition. With EIA inventory data recently showing an unexpected decline in US gasoline supplies and demand views slightly improved overnight, one might suggest that the bull camp has support from both the supply and demand front this morning. We think that recent volatility in ethanol profit margins and the end of the ethanol subsidy is another element that is providing support to gasoline prices over the last several weeks. While many might want to downplay the importance of the end of the subsidy for ethanol, traders should expect to see a noted increase in RBOB price volatility in 2012 because of the potential to periodically idle up 2% to 4% of the US gasoline additive supply chain. The Commitments of Traders Futures and Options report as of December 27th for Gasoline (RBOB) showed Non-Commercial traders were net long 56,048 contracts, an increase of 6,094 contracts. The Commercial traders were net short 63,052 contracts, an increase of 9,810 contracts. The Non-reportable traders were net long 7,005 contracts, an increase of 3,717 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 63,053 contracts. This represents an increase of 9,811 contracts in the net long position held by these traders. Critical support in February RBOB is seen at $2.6780 and resistance is pegged at the 200 day moving average up at $2.7277.

HEATING OIL: Like the rest of the energy complex, February heating oil managed a distinct upside breakout on the charts this morning and in the process the market rose to the highest level since December 13th. Not surprisingly, the ongoing war of words between the US and Iran gave the market part of its upward track today, but prices were also given an added boost by positive macro economic news from both China and the Euro zone overnight. While EIA inventory data recently showed an unexpected build in distillate supplies, inventories were still 20.605 million barrels below last year and 3.448 million barrels below the five year average. It is also possible that slightly colder US temps ahead are providing some minimal support to prices but mild weather so far this winter could require severe cold to actually create a physical shortage of US heating supplies. The Commitments of Traders Futures and Options report as of December 27th for Heating Oil showed Non-Commercial traders were net long 10,850 contracts, an increase of 2,248 contracts. The Commercial traders were net short 22,077 contracts, an increase of 5,399 contracts. The Non-reportable traders were net long 11,228 contracts, an increase of 3,152 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 22,078 contracts. This represents an increase of 5,400 contracts in the net long position held by these traders. Initial resistance in February heating oil is seen up at $2.99 and critical support looks to come in this morning just below the current market at $2.9530. The 200 day moving average in February heating oil today is seen up at $3.0575.

TODAY’S ENERGY MARKET GUIDANCE: The bulls have control to start and with the new sanctions from the US signed into law over the weekend, one might expect to see further reactions from the Iranians. Therefore, oil looks to be supported off geopolitical events, macro economic events and even because of currency market action. In the event that US numbers are positive later this morning and the trade starts to kick around the prospect of positive US payroll data at the end of this week, it is possible that energy prices will claw out a series of gains directly ahead.

Financials Waiting for Jackson Hole Comments

by on August 25, 2011

Commodity markets start the day on a positive note. Durable Goods number from yesterday is joined by a move down in Continuing Unemployment Claims. Crude oil continues be buffeted in both directions. A high refinery operating rate and high margin could indicate a build in products into the fall.

Fears of a Broad-Based Commodity Liquidation

by on June 16, 2011

Turmoil continues in Greece with riots and leadership turnover. Speculative interest seems to be leaving the grain markets with the weather threat reduced and crop conditions improving. A slight downward track in the energy complex with talk of releasing SPR stocks onto the market.

Energy: Short-Term Price Trend Points Lower

by on June 16, 2011

Below is a sample of The Hightower Report’s 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: July crude oil prices traded in a sideways fashion during the overnight and initial morning hours, following yesterday’s wide-range bearish reversal. The plunge in prices down to the lowest level since February 18th has begun to usher in more concerns over demand. The outside market tone is slightly negative, with weaker global equity markets and a rally in the US dollar to a new 3-week high. It also seems that the crude oil’s price direction is highly dependent to risk appetites and the unfolding Greek debt situation. The IEA made the news wires early this morning indicating that they were prepared to release strategic reserves of crude oil to support the global economy if needed. While they raised their demand forecasts for the next 5-years by an annual rate of 1.3%, they continue to monitor Saudi Arabia’s contribution of added supplies to satisfy current demand levels. For now, July crude oil is trying to consolidate recent losses, while it measures whether current economic slowdown fears will impact demand in the second half of 2011 and whether prices should be at a lower level. Yesterday’s EIA report showed a larger than expected decline of 3.406 million barrels. Perhaps a portion of the unexpectedly larger draw came from the closed Keystone Pipeline last week, which helped draw 1.0 million barrels out of Cushing. EIA crude stocks stand 2.45 million barrels above year ago levels and 21.923 million barrels above the five year average. Crude oil imports for the week stood at 8.638 million barrels per day, compared to 8.600 million barrels the previous week. The refinery operating rate was 86.1%, down 1.1% from last week. There was heavy volume during Wednesday’s down draft that rivaled levels seen during the early May slide, suggesting that the crude oil market could be fishing for a near term bottom. The short term trend in July crude oil favors the bear camp, with downside support below at $94.45, then the February low of $93.10.

PRODUCT MARKET FUNDAMENTALS: GASOLINE: July RBOB traded higher during the early morning hours after a negative wide-range reversal Wednesday. Yesterday’s action shifts sentiment back in favor of the bear camp after prices plunged to its lowest level since May 24th. Yesterday’s EIA gasoline stocks report showed a build of 573,000 barrels, which was slightly under consensus estimates. Gasoline stocks are 3.275 million barrels below last year, but 5.254 million above the five year average. Average total gasoline demand for the past four weeks was up 0.50% compared to last year. Gasoline imports came in at 1.115 million barrels per day compared to 1.158 million barrels the previous week. While there was talk of tightening supplies in the cash market due to the slide in imports, the weak outside market tone seemed to prevail. The bear camp has the edge after Wednesday’s negative trade, with support today coming in at $2.9235.

HEATING OIL: July heating oil began the overnight trade with a higher open, but has since leaked most of those gains. Wednesday’s EIA distillate stocks report showed a 105,000 barrels draw, instead of an expected build. The report showed a rather large decline in Midwest supplies, which was attributed to a boost in agricultural demand after a delayed start to planting. EIA distillate stocks stand at 15.801 million barrels below last year, but 6.737 million above the five year average. Distillate imports came in at 125,000 barrels per day compared to 155,000 barrels the previous week. Average total distillate demand for the past four weeks was down 3.57% compared to last year. EIA heating oil stocks rose 1.317 million barrels. Weak distillate demand highlighted in the EIA report is a concern that might not justify prices above the $3.00 level. Wednesday’s downdraft leaves the bear camp with the short term advantage. Near term support stands at yesterday’s low of $2.9702, then the $2.9500 level.

TODAY’S ENERGY MARKET GUIDANCE: The crude oil complex is off to a positive start after suffering major declines during yesterday’s session. The short-term price trend across the complex favor lower pricing ahead. While there appears minor evidence of bargain hunting this morning, the risk to the market is if higher demand levels are not seen later in the year. This is a factor that would support $85 to $90 per barrel crude oil. There is an active flow of US economic data this morning and there will be a great deal of attention paid to the Greek debt situation.

Little More of a “Risk On” Mentality; Softer Energy Complex

by on May 26, 2011

More positive tone to the markets over night. Energy markets are trying to determine where demand is headed. There is still some concern about tightening in the product markets, but a sharp rise in US refinery operating rate shows some effort to build into the driving season. Weather problems still plagues the US planting season, and a sudden shift from cold and wet to hot and dry could either help or hurt the crop.

Some Positive Comments on Commodities; US Planting Weather Still in Flux

by on May 25, 2011

Bit a positive tone in physical commodities. This after Goldman releasing a “buy commodity” forecast. This seems to conflict with their global economic view. Apparently, developing country demand will help carry commodity prices though the softness in the global economy. US planting weather is wet short term followed by a hot & dry pattern forming which is keeping volatility high.

Energy: Positive Track This Morning; Higher Target by Major Institution

by on May 24, 2011

Below is a sample of The Hightower Report’s 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: July crude oil traded higher during the early morning hours, helped by general strength in most risk-assets and upwardly revised price target on crude oil from a major Wall Street firm. Another factor that could be providing a level of support comes from recent NATO attacks on Tripoli, which are reported to be the largest ever. Reports overnight from a well-respected Wall Street firm cited growing emerging market demand as a factor cutting into supplies, as well as compromised OPEC spare capacity limiting supplies. There also seemed to be talk regarding the Euro zone debt crisis and that the recent plunge in commodities like crude oil could be overdone. Countering that view were warnings overnight from Moody’s Ratings, suggesting that a Greek debt default could negatively impact other European countries. The other focus in the crude oil market is the June 8th OPEC meeting, and whether the cartel decides to increase production quotas. There were reports overnight that the Saudi’s state run oil firm was considering tapping back into their first oil find that represents about 500 million barrels of the countries proven reserves. This could be taken as a sign that the country is looking for ways to boost production and capitalize on higher crude oil prices. In the meantime, open interest in WTI crude oil continued to decline and fell for the 7th session Friday. This decline has trimmed nearly 135,000 contracts (8.1%) since reaching record extremes on May 11th. Meanwhile, crude oil prices have hovered around those same levels indicating that the recent trade is one of distribution. July crude oil continues to consolidate the early May breakdown, with resistance above at the $101.00 area and support below at 96.00. The early advantage goes to the bull camp this morning, with the next resistance coming in at $100.42.

GASOLINE: July RBOB prices broke out to a new 3 session high during the initial morning hours and seemed to embrace forecasts for higher crude oil prices ahead. That optimism follows the latest government report on pump prices, which recorded their largest weekly decline since the financial crisis. While prices fell over $0.11 last week, they remain more than a $1.00 above year ago levels. It is possible that a portion of Monday’s late day gains came in response to the closure of a major gasoline refinery in Canada, and that could be lending a level of support again this morning. The refinery glitch, along with problems at an Illinois refinery fueled sizeable gains in the Chicago cash gasoline market. The bulls have the edge to start with the next upside hurdle standing at $2.97.

HEATING OIL: July heating oil prices took a brief turn below Monday’s inside day range overnight but has since reversed higher. This reflects a level of bullishness for July heating oil and favors more near term upside toward $2.9280. It appears that heating oil prices have found support on the back of an optimistic forward outlook for crude oil as well as a modest rebound in a number of physical commodity markets. It is also possible that heating oil has drafted upside momentum on the potential for greater diesel imports to India this year, as the country makes a switch from fuel oil to subsidized diesel. Meanwhile, the price action in July heating oil remains range-bound inside a triangle, with resistance at $2.9534 and $2.8395 below. The bulls have the early edge this morning, with the next upside resistance at $2.9534.

TODAY’S GUIDANCE: July crude oil is on a positive track this morning, perhaps from an upgraded price target from a major bank and a lack of fresh negatives on the Euro zone debt situation. The analyst upgrade could gain further attraction as the day unfolds, as it was the same firm that advised clients to take profits in crude oil near the April peak. July gasoline showed some resilience during Monday’s downdraft, and that could be a factor that reasserts itself in today’s session.

Commodity Outlook – 2011.05.20

by on May 23, 2011

Below is an excerpt from The Hightower Report’s most recent Newsletter. To receive access to this story, with trade strategies, and our daily coverage of 16 markets, visit futures-research.com for your free 2 week trial!

Going into the end of May, the outlook for many physical commodities was still mostly bearish. However, as recently as May 1 the overall market environment was still nearly a perfect storm for commodities, with positive growth expectations, noted inflationary pressures, and a weaker US Dollar. And there was only a passing concern for the approaching end to the easy money era. On the other hand, with a series of brokerage firms and fund managers predicting a top in certain commodity markets, the Dollar rebounding, and the pace of the US economy faltering, it didn’t take long for severely overbought markets like crude oil, silver, RBOB, copper and cattle to come under aggressive stop loss selling pressures. In looking at a composite non-commercial/nonreportable spec positioning of non-financial commodities, it is evident that the May washout was severe (see chart).

With the copper futures market as of May 10th seeing its non-commercial and nonreportable positioning drifting toward a mostly liquidated status and the US Treasury Bond market seeing its long-held spec short position virtually eliminated, it was clear that some commodity markets had already moved to price-in a large portion of the slowing expectations. In the silver market, where the May 10th COT report showed a non-commercial and nonreportable positioning of only 48,000 contracts and the market subsequently falling an additional $6.18 per ounce, it is possible that a large portion of the weak-handed longs  moved to sidelines more quickly than the mainstream press had been expecting. In our opinion, a spec and fund net long of less than 30,000 contracts in silver futures would be a very surprising development, as the threat of severe financial uncertainty and the need for flight to quality instruments has hardly been eliminated.

The hog market is another example of the extreme liquidation of the long interest from the marketplace, as the non-commercial and nonreportable combined spec position fell from a net long 49,731 contracts as recently as April 13 to only 16,055 contracts by May 10. Clearly many markets were overdone and the macroeconomic case had deteriorated, but traders need to be careful assuming a pattern of sustained losses in markets that have retained their bullish fundamental structure.

EIA Gas Stocks Comparison
While by May 1st the energy market was clearly overbought both technically and fundamentally, we maintain that energy prices did not make their climb above the $115 per barrel mark because of the “evil speculator” or because of patently phony fundamentals. In fact, for most of 2011 US WTI crude oil has been consistently priced below Brent crude oil prices. At times Brent crude oil prices were trading at close to $20 per barrel premium to WTI because the world in general was willing to pay more for crude supplies than were US customers and the US was holding a large measure of the world’s excess supply. Therefore, it was no surprise that Brent crude oil’s premium over WTI topped out at a level that could have justified the re-exporting crude from inside the US to the London market. Going forward, we think the remainder of 2011 will see the energy complex begin to take more and more of its direction from the product markets, as relatively low gasoline stocks in the US, Russia and Europe look to put the market on a path to extremely high gasoline and diesel prices later this summer. As the charts show, US and European product stocks are tight and, most importantly, US refinery operating rates have remained low. The supply build into the summer demand window looks to be less than normal or perhaps simply later than normal this year.

In a classic example of government action making the situation worse, we suspect that the US refinery operating rate will get even lower due to recent threats from the US government to investigate the refinery industry. What Washington and the talking-head press fail to realize is that the US refinery setup is flawed to begin with, but it is the only way we have to get product supply to the market. US officials don’t like high gasoline prices, and they think that hammering the refiners with market manipulation charges and investigations will solve the problem. But instead, refiners are likely to take the stance that buying crude and making it into products has to be done under even greater profit margins now because they might be forced to sell their finished goods at narrower margins in the future. Clearly the politicos can claim they dampened energy prices for the consumer, but over the coming months refinery activity is likely to drop to even lower levels due their interference, and the potential for a summer driven energy rally could rise significantly.

Another thing that might prompt a return to bull market status for commodities is the potential for sharp gains in grain prices, which in turn would magnify the inflationary vibe in the marketplace. With the grain markets needing a large jump in overall acreage in 2011 and the weather seriously countervailing that effort, one has to expect a further tightening of ending stocks in corn, perhaps soybeans and maybe even wheat. A serious run-up in corn could support many other physical commodity markets. Traders need to keep a watchful eye on corn and energy over the next six weeks.

Energy: In the Process of Recovering From Recent Rout

by on May 17, 2011

Below is a sample of The Hightower Report’s 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: Overnight pressure in the crude oil market seemed to come from economic slowdown fears, ongoing Eurozone credit challenges and prospects of another weekly inventory build. The crude oil market may have also come under pressure from early strength in the US Dollar. However, it seemed that sentiment began to shift in favor of the bulls during the early morning hours. Perhaps the effects of fires in Alberta Canada that forced a number of oil companies to close operations, potentially disrupting supplies, could be offering up a degree of support. While that news seemed to offer little support Monday afternoon, it could become a supportive factor in the near term. During Monday’s action, it appeared that the plunge in June RBOB to a new 2 month low was a force that weighed on crude oil prices. It is possible that the early gains in June RBOB this morning are offering up a measure of support for crude oil. There were also reports this morning indicating that the Chair of Libya’s National Oil Corporation was missing, and that maybe taken as a sign that Gaddafi forces are slowly falling apart. By and large, July crude oil appears to be in a wait and see pattern, as Eurozone debt woes circulate and US inventories are expected to show another weekly build. Expectations for this week’s EIA inventory report are for US crude oil supplies to post their fourth consecutive gain, with estimates ranging from 1.0 to 1.3 million barrels. The price action in July crude oil continues to grind lower, with Monday’s decline coming on a pullback in volume. The grind lower has defined a trading range with topside resistance at $101.20 and support below at $95.78. The intermediate term trend favors the bear camp for another push lower, but it probably takes another setback in risk appetites from disappointing headlines out of the Euro zone or soft US economic data to drive trade lower today.

GASOLINE: After making a lower low overnight, June RBOB prices appear to be in the process of rebounding. June RBOB slide below the $3.00 level Monday and reached its lowest level in 2-months, as flooding fears along the Mississippi River receded. US cash gasoline prices in the Gulf came under pressure Monday following the US Army Corps of Engineers decision to open the Morganza spillway, and that is a key decision that could help nearly 12% of US refining capacity from closing. As the fears of flooding receded, there seemed to be liquidation in the cash market from traders who stocked-up on supplies of gasoline and heating oil ahead of the potential flooding. Meanwhile, consensus estimates for this week’s EIA inventory report call for a build in the range of 1.0 to 1.25 million barrels. This would mark the second build in a row. The market will also be paying attention to demand figures to gauge the impact that higher prices, which were in the range of $3.3850 to $3.0220 during the report window. In fact, there were signs of demand destruction with the latest data out of Italy that showed the country’s demand for refined fuel products declined by over 1.5%, largely in response to a drop in auto gasoline demand. The technical outlook for June RBOB has reached oversold levels after the latest 5 day slide that has trimmed $0.50 in value. It is possible that June RBOB could garner a measure of support from the 100 day moving average below at $2.8967. Short term resistance comes in at $3.02.

HEATING OIL: June heating oil prices punched down to a new 7-day low overnight and managed to close the May 9th gap in the process. The positive rebound from that support level and subsequent move back into positive territory this morning provides the bulls with the short term edge. The cash market trade for distillates bounced during Monday’s sell-off in the future market, which favors an upside rebound in the session ahead. Expectations for this week’s EIA inventory report are for distillate stocks to show a gain in the range of 250,000 to 500,000 barrels. The short term trend in June heating oil favors the bear camp, but a move back above resistance at $2.94 would change that stance. The early morning rebound from a new 7-day low provides the bull camp with the early advantage.

TODAY’S ENERGY MARKET GUIDANCE: The crude oil complex appears to be in the process of recovering from the recent rout. June RBOB is the weakest of the group and largely responsible for dragging the complex lower Monday. The overnight move into a lower low and successful rebound provides the bull camp with upside potential. June heating oil seems to have the cleanest pattern, with a successful test of gap support and upside reversal. Near term targeting in June heating oil comes in at $2.9400.

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