Energy Futures Are Trying Another Rally To Wrap Up The Pre-Holiday Trading Week

Energy futures are trying another rally to wrap up the pre-holiday trading week after stalling out in Thursday’s session.  ULSD is leading the charge once again, up 9 cents in the early going, while WTI is pushing $2 gains and making an attempt to get back to $80, and RBOB is lagging up just 5 cents so far.

Another big sell-off in equity markets knocked the wind out of the energy price rally yesterday, although products did recover most of their losses as stocks staged a strong afternoon bounce to end well off their lows.  Even though equity and energy prices haven’t had a strong correlation lately, it was clear from the timing of the swings that stocks were leading the move in both asset classes yesterday, particularly with not much else available to influence trading this week.

So far there’s been at least 1 refining casualty from the winter storm, as the Suncor facility outside Denver was knocked offline following a record setting drop in temperatures earlier this week.   So far that’s the only confirmed outage at a refinery, but it seems inevitable that there will be more.  There are numerous reports across the south of pipelines and terminals having to slow operations due to the cold hitting areas that just aren’t used to or prepared for it.  While the predictions of single digits reaching the Gulf Coast have sparked some all-too-familiar panic buying, the natural gas and heating oil markets are largely shrugging off the storm however as the cold isn’t expected to last very long, and much warmer temperatures are forecast for next week. 

While the slide in fuel prices in the back half of the year has brought some much-needed relief to inflation-weary consumers, a Bloomberg article this week highlighted the combination of challenges that have caused more than $100 Billion to vacate the commodity arena, and forced some companies out of business.

Meanwhile, this WSJ article offers a good reminder that much of the trading is not done by people anymore, and the hedge fund algorithms that drive oil prices aren’t having as much fun as prices drop.    

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