It’s a mixed start for energy futures this morning after WTI traded below $48 overnight, threatening to follow through with last week’s collapse now that the 2017 trend has finally broken down. Crude oil prices are trading lower for a 6th straight day, RBOB gasoline prices are down for a 4th, while ULSD prices are currently clinging to small gains on the day.
Gasoline and diesel prices are moving in opposite directions this morning as a major winter storm passes over the great lakes this morning and bears down on the East Coast. This system is threatening to shut down traffic for a day or two in the country’s largest population centers while giving at least a small bump in heating demand after an unseasonably warm winter in the region. Blizzard warnings are in effect from New York to Boston with 20 inches of snow and 50 mile an hour winds predicted in some spots.
This is a busy week for monetary policy with the FED expected to raise rates on Wednesday, while 3 other major central banks also making announcements this week. By Thursday afternoon, most trading will go quiet however as the annual ritual known as March Madness will take over the airwaves.
Money managers appeared pretty content last Tuesday, hanging on to most of their record-setting net-long position in WTI and Brent. The Brent position saw a slight net increase on the week while WTI saw a small decrease. Since the big price moves didn’t start until Wednesday, we’ll have to wait until late Friday to see whether or not the speculators were heading for the exits during the big wave of selling last week.
8 more oil rigs were put to work last week according to Baker Hughes’. While a steady increase in rig activity has been the norm for months, this week was a bit unusual in that Oklahoma and Colorado led the increase in activity, while the rig count in Texas was unchanged. Physical drilling activity won’t change as quickly as futures do, so expect another few weeks of increases before we might see a slow-down due to the recent fall off in prices.