Factors at Play & the Ever-Shifting Landscape

There are a plethora of factors that move futures markets.  Technical factors such as support levels, moving averages, strength indicators.  Fundamental factors such as supply and demand, geopolitical events, weather.  Human factors like sentiment or speculation.  No one factor is correct on its own or should be singled out as the driving force.  We are in an area now that in any given hour, the direction of futures pricing is shifting quickly from one factor to the other.  I will say this, the market is always right.  Diesel has underwent a substantial correction of late, dropping roughly $.25 since early April, much on the heels of gasoline.  Yesterday poised to be a continuation as many focused on easing tension in the middle east, refineries coming back online after maintenance and expected increases in inventories.  After yesterdays release (shown above), one would have expected to see markets fall.  Large drops in demand for finished products as the appetite for Distillates is almost 14% lower now than last year.  Gasoline is down over 5%.  However, we reversed direction and moved higher as it appeared we were unable to break key support levels and many focused on Crude increases.  Both Gasoline and Diesel saw a .06 swing from low to high, affirming we may have hit the seasonal low.  With refineries running about 3% less than last year, and refining margins not as robust, you could see areas where finished product becomes sparse, thus higher pricing.  It is crucial to have a supplier that owns physical product during these times, as well as a means to get it to you.  We focus on keeping you powered. 

Leave a Comment