All energy markets have fallen in the last two weeks as part of the general wave of liquidation that has flowed around the world. Now, we see the first bottom extension - a sign that these markets should not be 'counted out' merely because they have seen the canvas up close (a boxing metaphor for those who don't like sports - we are trying to be more modern).
Plenty has been written about the limiting effects on energy prices of fracking supplies from the US that can be switched on quickly as prices rise, but less has been said about Chinese consumption. China added $1.5Trillion in GDP last year. That is half a UK or France (the world's 5th and 6th biggest economies) in a single year. Energy consumption is set to keep steady or rise and (to most people's' surprise) OPEC has kept production discipline with little apparent cheating, so stockpiles are shrinking. These conflicting influences will continue to keep prices in a range:
Cover those shorts that we recommended a while ago and buy some more for a bounce when you see a reason. Be careful, as prices have been falling and there is danger in being too eager too early, but we will probably just buy some now...
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com