Friday September 30, 2016
Overnight Wednesday and into Thursday morning the energy market was weaker, as participants took a break from Wednesday's torrid pace. However, despite some seeing the OPEC news as a non-event, during U.S. market hours on Thursday, prices were pulled higher again.
Outside of October RBOB, which expires today (along with October ULSD), the rest of the futures finished in the green. For reference, yesterday the November ULSD contract reached its highest price level since August 26th; however, Thursday's trading volume in the contract did not match the prior two days. We can expect elevated levels of volatility in the market, as rumors will continue to be pervasive leading up to the November 30th OPEC meeting.
Hurricane Matthew in the Caribbean escalated to a Category 2 Hurricane with maximum sustained winds of 100 mph at 2:00am this morning. It has continued to intensify and it at 105 mph, the National Hurricane Center projects Matthew to become a Major Hurricane (Cat 3 or higher) within the next 24 hours. Matthew is intensifying and projected to continue to do so in a historically unfavorable stretch of the Caribbean, which helps to depict the potential of this storm. The storm is working its way west and it expected to slow down to a crawl at which point it will turn northward which is where the uncertainty enters the mix. (see map)
The ultimate path of Hurricane Matthew can depend on how long it hangs in the Caribbean and it lets the path formulate. At the risk of getting too deep into the weeds, there are two ridges at play one over the Midwest section of the U.S. and one in the center the of the Atlantic Ocean. The ridge over the US is moving south while the ridge over the Atlantic is moving west. The further west the ridge moves the more Matthew will be pushed toward the East Coast.
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