Energy prices are moving higher Tuesday, after technical support held up during Monday’s session and seems to have sparked a rally this morning. WTI was able to find a floor at the 50 day Moving Average during both Friday and Monday’s session, and settled back above the 200 day moving average yesterday, which is now encouraging buyers to step back in. RBOB survived another attempt to break below $1.54 for the 4th time in 6 sessions, while ULSD bounced solidly off of $1.72. With some short term technical indicators having dipped into over-sold territory this type of a bounce is not too surprising, the question for the week now becomes how long does it last.
It will take WTI moving above $50.50 to break its bearish trend-line that started when prices peaked two weeks ago. ULSD meanwhile needs to climb back above $1.78 and RBOB needs to reclaim $1.60 if today’s early rally is to transition from a dead cat bounce to the end of the October bear trend.
The EPA announced Monday that it was planning to roll back the previous administrations’ Clean Power Plan, and declared the “war on coal” to be over. The announcement is unlikely to have any direct impact on petroleum prices, but it’s another sign that this EPA is much more friendly to the fossil fuel industry, which could have plenty of impacts down the road. Separately, ethanol RIN values fell again Monday as the industry continues to try and digest the EPA’s plans to tweak the Renewable Fuel Standard.
Richard Thaler won the Nobel prize in economics Monday, for research on how human traits affect financial markets. You may recognize Mr. Thaler from his cameo in the movie The Big Short. For those that watch the energy markets, particularly during the 2017 hurricane season, his theories on human behavior affecting markets should be fairly easy to relate to.
US Gulf Coast cash markets saw a pullback Monday as fears over Nate’s impact on refinery operations subsided. P66 announced it was restarting the Alliance LA refinery and that no damage was done, while Chevron was a bit more vague in reports that it had completed damage assessments in Pascagoula. We’ll have to wait an extra day to see the official numbers on how refinery run rates recovered last week since the EIA decided to celebrate Canadian Thanksgiving yesterday and won’t release the weekly stats until Thursday at 10am central.