RJO FuturesCast

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Energies

Crude-Crack at Crossroads

Posted 01/24/2019 10:19AM CT | Michael O'Donnell

As of Thursday morning, the March crude contract is trading little changed as the market weighs the upcoming holiday delayed EIA report following a bearish API number last night, which showed a large build.  The market is also weighing such factors as the possibility of slowing global growth and geopolitical tension, with Venezuelan turmoil now at the forefront. There is talk of sanctions as the a number of nations recognize the newly sworn in president while Maduro refuses to step down.

While the market’s uncertainty is seen from the flat price action this morning, it is also interesting to note the multi-year lows in the spread between crude oil and RBOB gasoline pictured below. While short-term traders may want to play volatility in the upcoming EIA report and possible Venezuelan sanctions, longer-term traders may want to position in the multiyear lows in the crack spread.

Technically, as visible in the in daily chart of crude below, the market seems poised for a move. While time frame, risk capital and risk tolerance should always be factored, it would seem these energy markets currently offer several opportunities to position considering those factors.

If you would like to learn more about energy futures, please check out our free Fundamentals of Energy Futures Guide.

Crude Oil Mar ’19 Daily Chart

Crude Oil Mar '19 Daily Chart

Rbob/Crude Oil Crack Spread Chart

Rbob /Crude Oil Crack Spread Chart

Michael O'Donnell

Mike started his career in the markets on the floor of the Chicago Board of Trade as a trade checker for a local market maker in the Dow Futures pit. This led to interning with an independent introducing broker and going on to work with a number of market participants including: speculating clients, hedge clients, introducing brokers, futures commission merchants, commodity trading advisors, proprietary traders, trading educators, system creators, and a number of international financial market participants.