Using DTN ProphetX. for Analysis and Research. An e-book dedicated to helping you improve your analysis by looking at RBOB futures performance

Transcription

1 Using DTN ProphetX for Analysis and Research An e-book dedicated to helping you improve your analysis by looking at RBOB futures performance schneider-electric.com

2 Introduction Harnessing the powers of charting and technical analysis The refined fuels energy trading industry requires timely, in-depth, and comparable market data. In today s volatile and ever-changing market, real-time data feeds and charting tools are the keys to minimizing risk and boosting profitability. For analysis and research, DTN ProphetX provides industry-leading access to energy market data from prominent energy exchanges, along with a vast array of spot and futures prices, historical data, news, and weather information. Harnessing the powers of charting and technical analysis can give you a leg up in successful market forecasting allowing you to turn analysis into awareness and action. 2 l Using DTN ProphetX for Analysis and Research

3 Table of contents Section 1: Forecasting RBOB Futures Performance...page 5 Section 2: Using Charts to Understand Supply and Demand How to guide: Charting supply and demand... page 7 Section 3: Understanding the Refinery Run Rate How to guide: Refinery run rate... page 9 Section 4: Compare and Contrast Multiple Data Points in a Single Chart How to guide: Compare and contrast multiple data points... page 11 Section 5: Analyzing U.S. Fuel Imports How to guide: Analyzing U.S. fuel imports... page 13 Section 6: Understanding Market Sentiment How to guide: Using CFTC data... page 15 Section 7: Understanding Market Structure with the Forward Curve How to guide: Creating a forward curve... page 17 Section 8: Charting with Technical Analysis Tools How to guide: Creating Fibonacci Retracement analysis... page 19 3 l Using DTN ProphetX for Analysis and Research

4 Section 1: Forecasting RBOB Futures Performance

5 Section 1 Forecasting RBOB Futures Performance Forecasting RBOB Futures Performance Forecasting the likely price performance of RBOB futures is important to anyone in the gasoline industry who hedges, establishes posted prices, and is responsible for product recovery costs. Sudden direction change and seemingly mercurial price volatility require the ability to swiftly react to safeguard margin, while offering opportunities to capture greater margin and boost profits. DTN ProphetX puts the tools and futures market intelligence needed for analysis and research in your hands offering predictability in today s uncertain market. The case study highlights several tools that provide a greater understanding in current and expected price movement by RBOB futures including fundamental and technical analysis and reading market sentiment. DTN ProphetX allows you to plot and compare the latest supply-demand statistics from the Energy Information Administration and trader positions from the Commodity Futures Trading Commission, while employing studies to analyze the latest price movements of RBOB futures. 5 l Using DTN ProphetX for Analysis and Research

6 Section 2: Using Charts to Understand Supply and Demand DTN ProphetX captures weekly statistics

7 Section 2 Using Charts to Understand Supply and Demand Using Charts to Understand Supply and Demand Closely-watched EIA data can and does move the market DTN ProphetX captures weekly statistics including gasoline inventory, production, imports, and product supplied to market and allows you to compare the current data points with historical statistics. Also referred to as implied demand, product supplied to market is the closest data set available to real-time demand offering a view of the fundamental strength in the market. How to guide: Charting supply and demand 1. In the symbol search field, drill down to Energy- EIA. Select the data to analyze. 2. For implied demand, select Petroleum/Product Supplied/Finished Motor Gasoline. 3. In the lower part of the field, right-click on either weekly data or the four-week average. 4. Select New and then Chart. 5. To overlay the RBOB futures contract, right-click within your chart. 6. Select Add Symbol and add the symbol QRB@C. 7 l Using DTN ProphetX for Analysis and Research

8 Section 3: Understanding the Refinery Run Rate See the refiners output levels compared to their utilization

9 Section 3 Understanding the Refinery Run Rate How to guide: Refinery run rate Understanding the Refinery Run Rate 1. In the symbol search field, drill down through the following path: Energy EIA/Petroleum/Refiner Inputs and Utilization/Percent Utilization. Key resource A key resource for refined fuels production analysis is the refinery run rate, which can be charted in DTN ProphetX. This information allows you to see the refiners output levels compared to their utilization and in today s market, it shows record-level production. You can also find current and historical U.S. refinery capacity, which increased by 350,000 barrels per day in This is an increase equivalent to adding a refinery. 2. At the bottom, you can select the geography (PADD or the entire United States) and time frame (weekly or a four-week average). 3. Right-click on Weekly U.S. Percent Utilization at the bottom. Select New and then Chart 9 l Using DTN ProphetX for Analysis and Research

10 Section 4: Compare and Contrast Multiple Data Points in a Single Chart Offering market insight

11 Section 4 Compare and Contrast Multiple Data Points in a Single Chart Compare and Contrast Multiple Data Points in a Single Chart How to guide: Compare and contrast multiple data points 1. Go to your Energy EIA symbol search and find the symbols you want to chart. One great feature of DTN ProphetX is its ability to compare and contrast multiple data points in a single chart, which offers important market insight. For example, by subtracting gasoline supplied to the market from gasoline production, you can observe the transformation in the U.S. fuels market from the shale oil revolution, with U.S. refineries processing far more crude oil. The high refinery run rate has moved some of the surplus crude oil downstream, creating surpluses in gasoline and diesel fuel supplies, while the United States has shifted from a net oil importer to a net oil exporter. 2. Select Charts at the top. Add the formula and press enter. 3. For our example, use WGFRPUS2-WGFUPUS2. a. The formula subtracts gasoline production by refiners and blenders from the amount of gasoline that has moved into the downstream market. 11 l Using DTN ProphetX for Analysis and Research

12 Section 5: Analyzing U.S. Fuel Imports Chart fuel imports nationally and by geographic region within the United States

13 Section 5 Analyzing U.S. Fuel Imports Analyzing U.S. Fuel Imports Chart fuel imports nationally and by geographic region within the United States How to guide: Analyzing U.S. fuel imports 1. In the symbol search field, drill down through the following path: Energy-EIA/Petroleum/Imports/ Total Motor Gasoline. Although the United States is a net exporter, oil trades internationally and the United States still imports crude and refined fuels despite fierce global competition. The U.S. East Coast remains dependent on gasoline imports as it lacks sufficient refining capacity. With DTN ProphetX, you can chart fuel imports nationally and by geographic region within the United States. DTN ProphetX s supply, demand, import, and export data provides key insights into market trends, as does another important data resource market sentiment, which we will look at next. The combination of supply and demand factors, as well as the psychology of the market, paint a full picture for market analysis and research. 2. In the bottom pane, select the U.S. weekly import rate (WGTIMUS2) or the four-week average rate (WGTIMUS2_4W). Right-click to select New and then Chart. 13 l Using DTN ProphetX for Analysis and Research

14 Section 6: Understanding Market Sentiment Identify the long and short positions held by different trading groups

15 Section 6 Understanding Market Sentiment Understanding Market Sentiment How to guide: Using CFTC data 1. In the symbol search field, drill down through the following path: Energy-CFTC/RBOB NYMEX. Market psychology is an important component in understanding price behavior 2. At the bottom, select: RBOB NYMEX Noncommercial Net. In using weekly data from the Commodity Futures Trading Commission, you can identify the long and short positions held by the different trading groups, including noncommercial traders or speculators. 3. Right-click on the weekly option. Select New and then Chart. For example, in the summer of 2016, these traders held their smallest net-long position in RBOB futures in more than a year, with a long position held on the expectation that prices would move higher over time. However, market sentiment changed abruptly in August, forcing this trading group to buy their previously sold futures contracts in what is known as short covering and futures prices rallied. 15 l Using DTN ProphetX for Analysis and Research

16 Section 7: Understanding Market Structure with the Forward Curve Highlight the shifting market structure for gasoline amid seasonal changes

17 Section 7 Understanding Market Structure with the Forward Curve Understanding Market Structure with the Forward Curve How to guide: Creating a forward curve 1. Select Chart/Forward Curve from the main menu bar. Highlight the shifting market structure for gasoline amid seasonal changes 2. Enter the symbol root for the future contract (QRB for RBOB futures) in the Futures Roots section. You can quickly determine the market s structure by charting a commodity s forward curve, which is either in contango or backwardation. A contango market is when the futures contract nearest to delivery is at a premium price. In backwardation, the contract price is below the expected futures spot price. 3. Under Contracts, select the number of contracts to be used for your chart. Now, click OK. Charting the forward curve for RBOB futures highlights the shifting market structure for gasoline amid seasonal changes. 17 l Using DTN ProphetX for Analysis and Research

18 Section 8: Charting with Technical Analysis Tools Understand daily and intraday price moves in futures

19 Section 8 Charting with Technical Analysis Tools Charting with Technical Analysis Tools Understand daily and intraday price moves in futures With DTN ProphetX, you ll have a wide variety of tools at your disposal, making technical analysis easy. Technical analysis is important to understanding daily and intraday price moves in futures. It is also critical to knowing when to enter (buy) or exit (sell) the market. A popular form of technical analysis is Fibonacci Retracement, which identifies price points for support a price level when buying typically emerges during bouts of selling and resistance, a price level when selling typically emerges during periods of buying. How to guide: Creating Fibonacci Retracement analysis 1. Select Charts from the main navigation bar. Click on chart. 2. Type in the futures symbol: QRB@C in our example for RBOB futures. Select add. 3. Click on the Fibonacci Retracement Analysis icon along the bottom toolbar. 4. Connect a key high and low price (or key low and high) on the chart. These are just a few examples of how DTN ProphetX provides you with increased insight into market activity. Ask for a demonstration today. Call us at l Using DTN ProphetX for Analysis and Research

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