On Thursday, the market opened similar to Wednesday’s at the high of the day and selling came in to knock it down. Rinse and repeat. However volume today unlike yesterday is falling as the market falls and is now running down 58% in relation to yesterday. Things would pick up only if we break yesterday’s low of 17.95 and technical selling would or should or could pick up. Otherwise, the falling volume shows a loss of momentum. The spreads continue to show stability. This appears to be related to demand. The August/July white premium is rebounding a bit after losing roughly $16 in 9 trading sessions.
Weather issues in Russia and Ukraine don’t impact the market but production of both could struggle this year after frost and now dry weather. Weather issues are all over the place but the market seems to be blasé about the situation as funds continue to have a death grip on the market We tend to think this could be changing, but the bullish trade is now pouring over their numbers and wondering where they got it wrong. Consumers should take advantage of these discount price levels unless they think the weather will suddenly turn the idea from here on forward.
On the macro crude oil is percolating within range of $80 a barrel, and a close above projects a move to $83.30 a barrel. Will Petrobras move then? The dollar briefly broke an uptrend line but has bounced off though traders now seem to be looking for two rate cuts after the slightly weaker CPI number earlier this week.
Michael McDougall is Managing Director at Paragon Global Markets, LLC.
