So today Dec 29, 2016 we had a drawdown on EIA numbers for gasoline. Forecasts were for a build. Crude made an unexpected build when there was a drawdown. CL is off maybe -0.5% while RBOB is off about -1.5%. The reaction to crude is expected, but the reaction to gasoline? On a drawdown? I can see crude inventories having an impact on gasoline but this is ridiculous. Anyone better versed in energy fundamentals/energy macro explain WTF happened? I had no position at anytime today, but the disconnect here is unreal. It's like company XYZ beating earnings, revising next years forecast up, and implementing a buyback and the stock drop 20%.
Prompt month has rallied from 1.30 to 1.70 in 6 weeks. That is a huge move and I don't believe the fundamentals supported that move. Also, keep in mind this is winter blend. You can't mix winter with summer so whoever is holding winter blend when the refiners switch over in about 6 weeks, you better have a buyer.
I hear you on winter vs summer blend Mav, but I don't think EIA differentiates on the report. I think they take the current month's blend. Which then in context of a unexpected drawdown in gasoline makes no sense.
That's what I'm saying. If the drawdown is in winterblend, which it is, then that is not a reason for higher prices. No one is going to pay up for winterblend especially after a 40 cent rally in 6 weeks. Supply issues are rare in late winter, the market is much more responsive in summer during driving season.
Hmm, you sure you had no position? Or are you new to trading commodities? If, then may I recommend you review price action in gasoline contracts subsequent to a pipeline explosion at Colonial in Alabama. I forgot but I think it was about 2 months ago. That subsequent price move was unreal but particularly the fact that the normalization move was very tradable. 1.5% moves are not unreal for any reason, even for no reason.
I'm well aware of the Colonial shutdown. However, that's a unknown unknown, you can't see it coming and put that into a model. You can however try to forecast inventories and trade the outcome accordingly.
Ohh no the unknown unknown stuff. Zz is right 1.5% move is a piss in the wind for this market. Also price doesn't always react to news the "correct" way.