Oil looks for bottom near $86 in volatile trading

Boston Terror

I am sure we are all disgusted and angry with this senseless and despicable act of hatred. The terror act is one that as traders we have to deal with. Our prayers are with those that have been impacted by the act of hate against humanity.

As we move forward we know that in the past these events have hurt demand, a problem that oil was already dealing with. Oil seems to be trying to find its bottom near $86.00 but it is far from solid. We should see a lot of volatility, but we should try to hold near $86.00 as a bottom. Look to take advantage of the volatility using short term entry points with tight stops. RBOB is being hit by demand destruction fears but because of many refinery issues has the next chance to make a big snap back. Bloomberg Reported that "A day after a power failure struck Port Arthur, Texas, home to 6.1% of U.S. crude-processing capacity, Motiva Enterprises LLC's refinery was said to remain shut and Valero Energy Corp. was starting two main units. Motiva's refinery, the largest in the U.S., is shut without a timeline for restarting, a person familiar with operations said. The plant has a capacity of 600,000 barrels a day. Valero has begun starting a 150,000-barrel-a-day crude unit and a 57,000-barrel-a-day hydrocracker, Bill Day, a spokesman for the company in San Antonio said. The disruption of power to plants with 1.08 million barrels a day of refining capacity boosted the spot market. Gulf Coast 85-octane conventional gasoline to be blended with ethanol strengthened 1.75 cents to 19.25 cents a gallon below New York Mercantile Exchange futures as of 12:16 p.m. New York time, according to data compiled by Bloomberg. Ultra-low-sulfur diesel gained 0.5 cent to a 1.25-cent discount. Valero's 310,000-barrel-a-day refinery is operating all units except one of two crude units and one of two hydrocrackers, according to Day. Day said he can't estimate how long the restart of the two remaining units will take.”

Nat gas hit a 21-month high and pulled back after an incredible commodity onslaught as well as the fact that it was time to take some profits. The CME raise margins. As reported by Dow Jones the CME  it will raise the collateral requirements for trading in benchmark gold, silver and other precious metals futures contracts, effective at the close of business Tuesday. The exchange operator said it also will increase margins to trade its benchmark natural-gas futures, also effective Tuesday. Margins to trade benchmark Comex 100-troy ounce gold futures will be increased by 19%, CME said in a notice emailed late Monday. The margin to trade silver will increase 18%, palladium will increase 14% and platinum will increase 19%. Natural-gas futures will increase 5.6%. Futures exchanges like CME keep tabs on market volatility as they determine how much collateral, or margin, traders must deposit to back up trades.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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