Energy prices had a strong day yesterday, topping last week’s highs among all three main products and sending Brent crude to a fresh high for the year. Calm words out of China soothing suspense and fear of a looming trade war took the majority of the credit for the large upward move. The uptick in uncertainty surrounding the Middle East, specifically Syria, seems to have contributed to yesterday’s run-up as well. The drop in tension with a demand center and a bump in tension with a supply center seemed to be a perfect combination to rouse some of the bulls that dozed off waiting on a spring rally.
Prices seem cautiously positive this morning after yesterday’s rally. Among an API report with mostly bearish figures, those that would see prices continue their climb are clinging to the ~4 million barrel draw in diesel inventories for upward momentum. Crude inventories built 1.8 million barrels and gasoline added just over 2 million barrels last week. NYMEX HO leads the complex with a gain of $.0170 so far this morning, dragging RBOB and WTI with it at gains just over flat.
Crude oil and its refined product counter parts’ prompt month futures charts showed some pretty interesting action yesterday. All three contracts started the day below their respective 10-day moving averages and blew past them through the day. Setting new highs for 2018 seems to be the only technical resistance keeping the complex from adding another 5-10 cents in the near term. As for the rest of this week, direction from the DOE report (due out at 9:30 central) will likely set the tone, with global news providing secondary cues.