Drivers Get Early Christmas Present
?? Fundamentals
U.S. Gasoline inventories posted their largest increase in 11 years last week, sending RBOB futures to 3-week lows. The Energy Information Administration (“EIA”) reported in the weekly energy stocks report that U.S. Gasoline inventories increased by a whopping 7.86 million barrels, as refinery utilization topped 90% last week. This was the second consecutive build in inventories and comes at a time when demand is slack.
The EIA is not anticipating any major increase in Gasoline demand in 2013, with motor consumption expected to remain flat, despite projections of lower pump prices next year.? Follow-through selling tied to long liquidation is quite possible, especially with some speculators currently net-long the market.
The most recent Commitment of Traders report shows non-commercial and non-reportable traders holding a combined net-long position totaling just over 84,500 contracts as of November 27th. Commercial buyers may hesitate at current price levels, especially given the increased potential for lower prices heading into 2013 as weak longs head for the exits.
?? Technical Notes
Looking at the daily chart for January RBOB Gasoline, we notice prices have now fallen below both the 20 and 200-day moving averages, putting both long and short-term Gasoline bears in command.
The 14-day RSI is also turning lower, with a current reading of 41.67, and there appears to be some good support all the way to around 2.5500 should prices fall below 2.6000. This may lead to some price consolidation at lower levels prior to the market making its next major move. Resistance is found around recent highs in the 2.7500 to 2.7600 price range.
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