If the quote "the trend is your friend" isn't the true narrative of the energy complex over the past 20 trading days, I'm not sure what other phrase may be used to depict exactly what we have witnessed. WTI crude for August delivery has had a 20.15% rally from its lows on June 12th to its highs on July 11th with only seven opportunities to buy lower on the day and watch it rally over the following days.
Early Friday morning, a massive explosion occurred in south Philadelphia at the Philadelphia Energy Solutions Refining Complex. The 150-year-old oil refinery, opened in 1866 just after the Civil War, had a vat of butane ignite and explode causing Interstates 76 and 95 to close and even “rattled” homes in the South Jersey area.
As daily energy sector market participants, we are often reminded how much drama, information or data needs to be vetted and digested on any given day. Unlike the set of “Oakdale, Illinois” in “As the World Turns” (1956 – 2010) where melodrama was the main theme and “the bleakness of winter, the promise of spring, the fullness of summer, and the harvest of autumn” were everyday life, the world of energy is a lot less predictable. Below you will find just some of the current headlines, event risks and technical levels that have to be digested just in one day:
Another commodity trading year is upon us and New Year’s resolutions across the western hemisphere are cloaked with purpose and resoluteness. Many have vowed to exercise more, eat healthy and save money. Even though only about 8 percent of these New Year’s resolution ambitionists persevere with their said goals, it is nonetheless a feeling of excitement and optimism of what might be. Market participants in the energy sector are most likely seeking that same sensation of excitement for less volatility and more stable prices, more clarity in supply/demand across the globe, transparency with trade talks/tariffs, pellucidity with Iran sanctions and possibly a reverse course in actions to avoid a further global slowdown or even a recession. If, however, the first 2 trading days of 2019 for the WTI futures contract for February delivery price action is any indication of what lies ahead, we are in for more of the same rollercoaster ride of uncertainty, high volatility and event risk price movements. The first trading day of the year brought on an intraday range of $3.43 a barrel or a 7.18% intraday move. Today, as of 12:30pm EST, we have already seen a 4.51% move or a $2.14 a barrel intraday trading range.