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“The markets look set to take direction from news”
No-one should make a habit of feeling sorry for traders. The reasons for this are too plentiful and too obvious to be detailed in this column. But from this starting point I would say: let’s spare them a thought this summer.
The energy markets are making headlines for all the wrong reasons; record lows have been seen on gas and power markets, with persistent fresh lows seen on coal. At the same time Brent crude has been seen breaching the $115/barrel mark before then posting some of the biggest intraday losses in almost a year.
With market volatility comes the opportunity to make money, of course. But the nature of volatility is becoming decidedly more unpredictable. Put away your spreadsheets, folks – this summer the markets look set to take direction from news headlines as much as analyst forecasts.
Military flare-ups in Ukraine and Iraq have left traders scrambling to keep up with spiking prices, despite the fact that exports from both countries have remained consistent.
A suspected terror attack on one of Ukraine’s many gas pipelines was enough to drive prices almost 1 pence per therm higher in the space of just a few hours.
The pipeline, it turned out, wasn’t even in use. As a gas trader aptly relayed via Twitter: “Session digest: Empty pipeline self-combusts. Traders buy at crazy prices. Half get fired. Half take Xanax. One just tweets sh*t.”
I wouldn’t want to put any money on what the next move will be in the Russia/Ukraine, Sunni/Shia, Isis/Maliki conflicts.
But that’s exactly what traders will need to do.
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