Drivers Driving Energies
Persistent high demand for
unleaded gasoline
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shift production priorities to prepare for winter, is driving oil and distillate
futures to the consolidation range that defines the front-month October
highs.
Refiners usually shift gears this time of
year to “crack” oil into the distillate heating oil, a primary
heating fuel source in the Northeast, and scale back gasoline production.
But strong demand for gasoline has continued beyond the traditional close of
the major driving season, Labor Day, and supplies of the EPA-mandated
reformulated grade of unleaded are in increasingly short supply in some
major metropolitan areas that require its use. An outage of a major gasoline
reformulated refiner near Chicago is in part responsible for the gasoline
shortage.
Tipping you off to the potential for a
nice move in the energies was October crude oil
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heating oil
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domination of the Momentum-5
List. When a sector takes over the Momentum-5 List such as the energies did
last night, there is an increased likelihood that the entire group will
rally. All three contracts are making good on Off The Blocks
entries but could encounter resistance as they bump into overhead
congestion at their highs.
Layoffs at factories came in at double last month’s rate according
to an anticipated employment report, frightening long holders of stock (and
equity index futures holders) that an economic recovery and a commensurate
comeback in corporate earnings could be pushed even further into the future.
Stock index futures got off to a down start, reacted in a test of yesterday
afternoon’s highs, and are back trading on their lows of the session.
Intra-session highs have persistently been sold. Stock index futures are
figuring prominently on the
Implosion-5 List.
The jobs report also showed a four-year high in unemployment,
sparking a move into the perceived safety of interest rate futures. Both T-bonds
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and
10-year notes
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setups, erasing all of the losses they suffered when a few days ago, the
NAPM report suggested the economy might be bottoming. Both contracts are
currently making good on reversals at their previous 20-day highs, in
same-day Turtle Soup Setups (tomorrow setups Turtle Soup Plus One sell
patterns in both contracts).