Bulls Getting Fired-up over Gasoline
?? Fundamentals
U.S. motorists are starting to feel some “pain at the pump” again, as front-month Gasoline futures are trading at nearly 3-month high. The soon to expire February RBOB futures are nearing the $3.00 per gallon price level, with the most recent bullish catalyst being the announcement that Hess Corp would be closing its New Jersey refinery next month and is planning to eventually exit the refining business.
East coast Gasoline inventories are already about 10% below last year’s totals, which is adding to some traders’ concerns of potentially tight supplies going into the summer peak driving season. In last week’s Energy Information Administration (EIA) weekly energy stocks report, it was noted that U.S. gasoline stockpiles fell by 1.738 million barrels the previous week, which was the first reported decline since late November, as refinery utilization fell to the lowest levels since March of last year at 83.6%, as seasonal refinery maintenance schedules lowered production.
Gasoline futures were not the only energy product favoring bulls, as March WTI futures also traded at multi-month highs, as concerns of unrest in the Middle East and North Africa and improving U.S. economic data have offset ample Crude supplies in the U.S. Going into this morning’s EIA stocks report, many traders are looking for Oil inventories to have increased by about 2.7 million barrels, and Gasoline inventories are expected to have posted a modest gain of 200,000 barrels last week.
?? Technical Notes
Looking at the daily continuation chart for RBOB Gasoline, we notice prices are starting to accelerate to the upside, possibly fueled by traders caught in the “bear trap,” as prices briefly broke below the lows of the recent consolidation pattern before rallying sharply in the following trading sessions.
The 20-day moving average (MA) is approaching the 200-day MA, with a crossover of the shorter-term MA over a longer-term MA generally viewed as a bullish formation. The 14-day RSI has moved into overbought territory, with a current reading of 73.40. The next resistance level is seen near 3.000, with support found near the 200-day MA, currently near the 2.8200 price level.
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