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RBOB Gasoline Analysis

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RBOB Gasoline Futures

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.  

Free in-depth analysis of the RBOB Gasoline futures market written by a professional RBOB Gasoline trader.

August 10, 2014

Gasoline Futures Trader, Van Commodities, Inc.

The front month gasoline future (RBU14) closed the week on August, 08 at 2.7537 after trading to an intraday and multi-month low of 2.6983 on August, 05. RBU14 fell twelve percent over a seven week period from an intraday high of 3.0729 on June, 23. The move up in RBU14, during the first part of June was caused by anxiety over a possible reduction in Iraqi crude exports as a result of attacks by the terrorist group Islamic State (ISIS) on Iraqi territory. Market participants concluded over the back half of June that the supply concerns, resulting from the geopolitical events in the Middle East were overblown and speculative interests had added too much of a price premium to RBU14, relative to the supply demand fundamentals.

Overall gasoline supplies declined roughly four and half million barrels according to the Energy Information Administration (EIA) in their Weekly Petroleum Status Report on August, 06, for the period ending August, 01. Although inventories declined more than market participants had expected, supplies of gasoline in storage are in the middle of the five year average for this time of year, at roughly two hundred fourteen million barrels. 

Not only was the drawdown in inventories larger than traders had expected, but renewed tension in Iraq and United States (US) involvement along with a technically deeply oversold market helped push RBU14 higher off the intraday lows on Tuesday.

RBU14’s trade down to intraday lows at the beginning of last week resulted in the contract being deeply oversold, based on several momentum studies. Even with the oversold condition and the renewed geopolitical RBU14 price action was rather weak at the close of trade on Friday. Unless the turmoil in the Middle East results in an actual reduction in crude oil supplies it appears that over the short term RBU14 may trade in a range with initial resistance coming in at 2.8060-2.8120 and stronger selling pressure 2.8230-2.8450 with support initially at 2.7100-2.7200 with better support at 2.6600.

 

May 14, 2013

Gasoline Futures Broker, Van Commodities, Inc.

The Gasoline future (RBM13) appears to be stuck in a range for the near term. Energy traders will be looking to the Energy Information Administration’s (EIA) petroleum status report tomorrow for gasoline, crude oil and distillate production and storage data. RBM13 trader’s expectations are for a gasoline inventory drawdown of roughly seven hundred thousand barrels. Last weeks data showed gasoline stocks to be roughly two percent above the five year average and crude oil inventories to be at record levels. An EIA report today confirmed market participant’s view that global crude oil markets continue to be well supplied.

RBM13 may find initial resistance at 2.9000-2.9150, with firmer resistance at 2.9600-2.9800. Initial support may come in at 2.7890-2.8060, with further support at 2.7385-2.7650.

 

March 9, 2013

Gasoline Futures Broker, Van Commodities, Inc.

The eight day gasoline future (RBJ13) sell off from February 19 to March 01 took the contract down eight and half percent resulting in an oversold condition, based on several momentum studies. The most recent EIA data, reported on March 06, showed gasoline inventories to be in line with the five year average. Most refineries have finished with seasonal maintenance and are ready for production demands going into the spring and summer driving season, according to the Lundberg Survey.

 

Over the near term RBJ13 appears to be stuck in a range of 2.6500-3.4000. Intermediate term momentum indicators are in the process of working off an overbought condition and short term indicators are just coming off of an oversold condition. RBJ13 will possibly move in line with swings in crude oil as seventy percent of the gasoline price at the pump is related to the price of crude.

 

Over the near term initial support for RBJ13 may come in at 3.1700-3.1900 and stronger support at 3.1100-3.1400. Initial resistance may come in at 3.2350-3.2730 and stronger selling at 3.3400-3.3800.

January 20, 2013

Gasoline Futures Broker, Van Commodities, Inc.

Supply and demand fundamentals for the gasoline future (RBH13) appear to be marginally negative over the intermediate term, but the unleaded gasoline market continues to trade at the higher end of its multi year trading range. Last week’s EIA data continued to indicate that the domestic gasoline market is well supplied showing inventories roughly seven percent above the five year average. A couple of factors on the domestic and international fronts appeared to support higher gasoline prices last week. Traders seemed to key off on news about a terrorist attack at a gas facility in Algeria, renewing concerns over possible geopolitical issues creating snags in the global energy supply chain. On the domestic side several pieces of economic data on the US economy came in above market expectations and may have given price support to RBH13.

 

The roughly four cent rally in RBH13, from its intraday low on Wednesday, started from a marginally oversold condition on short term momentum studies. The contract appears to have support on pullbacks and may have further room to run on the upside, but RBH13 should find sellers not too far above present price levels. Initial resistance may come in at 2.8200-2.8500 and stronger selling at 2.8700-2.9100. Initial support for RBH13 may come in around 2.7200-2.7700 with stronger support at 2.6300-2.6700.

November 13, 2012

Gasoline Broker, Van Commodities, Inc.

Since hitting a high of 3.4762 in April 2011, from the low of $.7850 in December 2008, basis the weekly nearest futures chart, the gasoline market has been contained at the higher end of its trading range. Traders and investors are trying to weigh several factors and unknown variables in placing bets about the next major move in the gasoline market. Factors which have supported higher gasoline prices over the past several years include; massive monetary stimulus globally by major Central Banks, a firmer global economic environment, geopolitical concerns in the Middle East and marginally low US gasoline inventories.

 

Investors are now looking at slowing global expansion rates with Europe contracting and questions over US and Chinese growth potential. Concerns also lie over the attempt at fiscal austerity in Europe and the prospective need for the US to address large projected budget deficits and massive Government debt.

 

Traders trading the deflation theme see the need for Major Central Banks to step away from their massive injections of liquidity and for so called fiscal responsibility by Governments. These traders are looking for slower economic growth and therefore downside price activity. On the other hand, traders who project further monetary stimulus and fiscal expansion by major economies will look to the inflationary aspect of such policies and will trade gasoline to the upside.  

 

A clearly defined range, basis the nearest weekly futures has 2.50 as support, if breached portends a possible breakdown and 3.40 as resistance with a possible breakout signal if violated on the upside.

 

The gasoline futures, basis the December contract (RBZ12) is oversold based on several intermediate term momentum studies, but has worked off the deeply oversold condition on shorter term studies. The shorter term pattern being carved out by RBZ12 implies a market uncertain of direction; but once resolved, whether to the upside or downside, could result in a large move. Over the near term, initial resistance comes in at 2.6800-2.7300 and further resistance 2.7800-2.8600. Initial support should appear 2.5300-2.5800 and further support 2.4500-2.5000.

 

April 4, 2012

Gasoline Broker, Van Commodities, Inc.

The Energy Information Administration (EIA) release of its weekly energy report today showed increasing U.S. production and imports pushed up U.S. crude oil inventories by 9.01 million barrels last week, when market expectations were for a rise of only 2.2 million barrels. The increase in inventories put stocks at their highest level since June 2011 and 4.7 million barrels above the year-ago period. U.S. crude futures fell on the news taking unleaded gasoline down with it, even though gasoline stocks fell 1.46 million barrels, within market expectations. Outside concerns about downside risks to the euro zone economic outlook pressured the euro to its lowest level against the dollar in two weeks, adding to the pressure on the energy complex.        

 

The Unleaded Gas contract appears to be overbought based on several momentum studies. Front month unleaded gasoline, which is the May contract (RBK12) closed at 3.33/gal today and has run into significant resistance in the low 3.40 area. We would not be surprised to get a pullback in RBK12. Initial support lies around the 3.270 area if this is taken out a fall towards the 3.15-3.19 level would not be surprising.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

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