For the most part, the price discovery in energies was muted by mixed data. The soft Euro Zone and Chinese data was joined by worse than expected US retail sales putting a negative spin on demand side pressure. This affect was offset in the energies by unexpected draws in the EIA report in WTI, Gasoline and Distillates. A trifecta draw such as this has not been seen for sometime though when compared against the expectation, the 2 to 3 million barrel misses are not egregiously off. Further bullish action can be found in the waning likelihood of a sooner rather later rate hike domestically as the data seems to be consistently softening both in the US and abroad.
Overnight saw little action as the energy markets, as well as the indices, appear to be stuck in a range as new fundamentals are need to produce either a continuation trade or reversal. Currently the most active front seems to be in the currencies. With the dollar trading near its yearly lows and the euro sharply higher, commodities could begin to fair well in this scenario.
When looking at the WTI crudel contract, it feels as if it has found a balanced price around the 60 dollar area. Big changes in production, demand and/or geopolitical unrest will be the most likely fundamental candidates to influence the next major price move. While it is impossible to be overly accurate in predicting what these possible developments will be and when they may occur, there are measures available to either speculate or hedge, depending on your needed strategy, to attempt to be prepared for or take advantage of these coming developments.
The natural gas inventory numbers are due out today with a more substantial build of 116 BCF expected. This would be the first time in several weeks that the inventory data would be above the 100 level and could feature a change sentiment going forward if it were to be at or above this level. Any lower report should produce a sharp follow through rally above 3.00 for the first time since recent lows were put in at the 2.40 level. Short term options (12 days) are available in the June contract for reasonably inexpensive opportunities to play this event, scheduled for release at 9:30 AM CST, which represent an attractive risk/reward relationship.
Disclaimer: Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors.