Energy Futures Update

Although the news regarding the US oil refineries increase gasoline production in preparation for the peak-demand summer driving season is significant, it can hardly be a surprise to the market. Moreover a change in sentiment brought about by speculative buying driven by hedge funds seems to be the main driver for higher prices.

Once again, the major nations in the UN brought some alterations to the table pertaining to a resolution imposing sanctions on Iran and suggested a vote by Security council on Saturday.

This is highly relevant to the energy market, however, we have a difficult time adding a huge premium to WTI prices on the back of what we see as chronic geo-political risks. In other words, this is not really news, but something that we have been factoring into prices for a long time now.

Yesterday market action can only really be described as one way traffic and although we could see some profit taking, we see any such move as short lived and a good opportunity for fresh longs. We reached our short term targets of 61.00 and 61.75 and by the looks of things we could move higher.

Thus we see any setback towards 61.30 to 61.05 as a good opportunity for fresh longs targeting 63.20.