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Energy Complex Likely to Open Lower

Tuesday, Oct 29 2019
Market Talk

The energy complex will likely open lower this morning, continuing to retrace last week’s gains. Uncertainty surrounding potential OPEC+ (read OPEC+Russia) production cuts and anticipated inventory builds are being blamed for the lower price action today. While it seems most headlines preceding decisions from the oil cartel and its main ally seem mostly to be conjecture, we won’t have to wait long to see if cuts are in the cards since the next supply meeting is set for December 5th & 6th.

The S&P 500 hit record highs yesterday, widening the gulf between energy and equities prices that traded in tandem just a year ago. Unrelated asset classes trading independently is typically a sign of a healthy market; that may not mean much to production rigs which reached a 2 year low last week due to unviable economics.

Tropical activity is pretty quiet for now, with only one area that could potentially develop into a system out in the mid-Atlantic. While we are on the tail end of the 2019 Atlantic Hurricane season, we could still see development going into the end of the year. On this day 7 years ago Hurricane Sandy made landfall on the US mainland and went on to be the most destructive storm of the 2012 season.

WTI futures are testing support levels this morning helping keep the crude benchmark above $54.50. If broken there is little in the way to keep prices from threatening the $51 range. It’s a different story with refined products futures, facing a slew of resistance levels in between current prices and a likewise 6.5% drop.

Click here to download a PDF of today's TACenergy Market Talk.

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