Today saw a swift and decisive reversal of last week's out-of-nowhere rally on Crude, Commodities, and Stocks. Not too surprising, given there were really no changes in fundamentals that justified a rally of the magnitude we saw, outside of the ever present fear of supply disruptions whenever the East Coast faces major snowfall, and the market being technically oversold.
Let's look at the numbers real quick:
Wednesday: Crude hit an astonishing $26.55/bbl, or as the internet expressed it in meme form - cheaper than a bucket of KFC Chicken (apparently thats $28.75). ULSD settled down over 4 to $0.8657, and RBOB adjusted mildly off 85 points to $1.0177.
Thursday and Friday the rally from nowhere kicked in, with Crude surging 4% Thursday and 9% Friday to close out the week. ULSD was up 13 cents to finish the week just shy of the $1 benchmark, at $0.9957. RBOB jumped modestly Thursday but jumped up over 5 cents Friday to close out the week at $1.0838.
Today we saw the real correction however.
Iraq announced a new record high output for December at over 4 million bpd. Ironically, given the drop, OPEC announced today that there would be a meeting called (reports are by Qatar) to address "cooperation" from non-OPEC countries in curbing supply to stabilize prices. You read that right - NON-OPEC countries.
The market essentially shrugged off the suggestion, as its improbable to impossible that the US would cooperate, and it's equally unlikely Russia, or anyone else will either, especially if the Saudi's, Iranians, and apparently now the Iraqi's as well have no intention of backing off their production (and therefore market share).
To wrap it up, today we saw Crude barely stay above the $30 benchmark, settling at $30.34. ULSD tumbled .0604 to $0.9353 and RBOB dropped .0538 to $1.0300.
Tommorow the API projections may cause ripples, but the major news will likely be Wednesday's EIA report, barring any unforeseen worldly events, of course.
How low can we go?