Rally-Or-Else Time For Energy Futures
It’s rally-or-else time for energy futures after the 2nd heady daily sell-off in the past week has knocked 7% or more off most petroleum contracts, and left them on the verge of a technical breakdown. Brent crude dipped briefly below the $70 mark Thursday, and RBOB broke below $2 for a few minutes during the lows of the day, erasing almost all of their April gains and setting up an important technical test over the next few days.
If those levels break for good, it looks like there’s plenty of room to fall before the next layers of chart support come into play, and could easily mean another $5/barrel losses for Crude and 10-15 cents for refined products. Then again, we’ve seen this market bounce sharply after a brief liquidation plenty of times over the years, so we can’t call an end to the bull run just yet.
More bad news on the West Coast, the P66 refinery in Carson CA was hit by a another fire Thursday afternoon. No word yet on the impact to production, and it’s 5am on the West Coast as I write this so no spot trading has taken place to gauge the market reaction.
The April payroll report showed an increase of 263,000 jobs for the month, and the headline unemployment rate dropped to a 20 year low of 3.6%, while the “U-6” rate held steady at 7.3%. Equity and energy markets had a modestly positive reaction to the new that seems strong enough to keep recession fears at bay for a while longer, while not so strong as to risk the FED rethinking their stance of holding interest rates steady.