Wipeout Continues For Energy Prices
The wipeout continues for energy prices to start Friday’s session with most contracts down another 1.5-2% on the day and reaching fresh lows for the year some 40% below where they stood less than 3 months ago. Even a report overnight that Saudi Arabia would be cutting its production more than previously announced was not enough to keep the sellers at bay.
It’s been a brutal week for energy (and equity) bulls after a technical trap-door seems to have been triggered another wave of selling. Brent crude is now down $7/barrel for the week, while refined products are down around 13 cents/gallon each.
The sell-off can’t be purely blamed on technical factors however. As the forward curve chart below shows, energy futures have rapidly transitioned over the past month from a backwardated forward outlook expecting tighter supplies, to a contango curve that suggests a glut of inventory is coming.
All bets are off on where prices will go today as volumes are already dwindling with holiday travelers getting an early start. Nymex futures will trade on Christmas eve in an abbreviated session, and will be closed completely Christmas day. Spot markets will not be assessed either day however, so most rack prices published tonight will carry all the way through to Wednesday.