Energy Futures Are Trying To Find A Bottom, While U.S. Stock Market Is Closed For The Day Along With Spot Markets For Refined Fuels

Energy futures are trying to find a bottom this morning in an abbreviated holiday session while US stock markets are closed for the day along with spot markets for refined fuels.  Last week’s big selloff pushed gasoline prices down nearly 70 cents from their June 10th highs, but so far the weekly trend lines are still holding up, making it too early to call an end to the huge 7 month rally.   WTI is also in a precarious position on the weekly charts, threatening a drop below $100 if support fails to hold around $109, while ULSD looks the strongest both technically and fundamentally, keeping the door open to another rally despite the concerns of a widespread economic slowdown. 

Reports that Ukraine has struck Russian natural gas drilling platforms in the Black Sea this morning are adding to the numerous concerns over natural gas supplies across Europe, and seems to help diesel continue to find a bid as a key replacement option, particularly in the winter months ahead. 

Money managers continue to show signs of hesitation in making wagers on energy prices with net length and open interest remaining low across the board for petroleum contracts.  ULSD did see a healthy uptick in its open interest last week as the producer/merchant category added to its short position which could be some refiners looking to hedge their output at lofty levels.

Baker Hughes reported an increase of 4 oil rigs and 3 natural gas rigs drilling in the US last week.  In an unusual twist, the report showed all 7 of those rigs were put to work in New Mexico but none were reported in the Permian basin, which accounts for more than half of the total US activity.

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