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July Purgatory Trading Pattern Continues

Wednesday, Jul 29 2020
Market Talk

The July purgatory trading pattern for energy markets continues this week as prices struggle to break out of their neutral pattern. WTI has landed on a $41 price for the past seven trading sessions, while Brent has ended the day with a $43 for the past five sessions. 

If you are getting bored with energy prices going nowhere, take a look at the Gold market that has rallied to a record high as investors seek a safe haven in a money-printing-gone-wild environment with extreme levels of economic uncertainty.

The API was reported to show a decline in U.S. oil inventories of 6.8 million barrels last week, that immediately put a bid under WTI prices that’s lasted through the overnight session. Refined product inventories had slight builds (one million barrels for gasoline and 187k barrels for diesel) that are keeping the optimism in check. The EIA’s weekly report is due out at 9:30 Central Time.

The Fed’s Open Market Committee (FOMC) has another meeting today, and will release their statement at 1 p.m. Central. The CME’s Fedwatch tool shows that not only is there no chance of an interest rate change expected today, there’s a zero percent probability of a change in the next eight months priced into the market currently. That means the market reaction to the statement should be minimal today, and that the press conference following the official statement may have more influence on prices.

The record setting Atlantic hurricane season continues. The national hurricane center is predicting a new tropical storm (Isaias) will form in the next day and is heading towards Florida. The current forecasts suggest it will stay at “only” tropical storm strength, but as we just saw with Hanna – and as has been a pattern the past few years – don’t be surprised to see additional strengthening beyond what the current models show before it reaches the coast. On its current path, the storm does not appear to be a threat to any refineries, but the port of Tampa may need to close as it  passes.    

Click here to download a PDF of today's TACenergy Market Talk.

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