Morning Futures Roundup
Has Gasoline Already Peaked in 2012?
There has been much discussion over the past several days regarding whether Gasoline prices have peaked for the year. It may be a bit premature to be having the discussion when the driving season has not yet begun. Those believing the 2012 highs for the RBOB contract have already been made have a compelling argument, as the economic outlook for the US and much of the world remains largely negative. The fact that the US economy is simply not creating jobs at a pace many would like to see may have a negative impact on demand.
Overseas, the slowness in Europe was expected, as was a slowdown in China. The rate at which China has been slowing has been a concern for many, and several different forecasters have slashed the Asian giant's growth outlook recently. The UN-Iran discussions over Iran's nuclear program offer promise and can be seen as a negative for Oil prices.
What may ultimately decide the direction of the RBOB contract this year is refining capacity, especially on the East Coast. Many refiners are struggling to turn a profit, especially if they are running well short of their own capacity. This may trigger refinery shutdowns, shrinking the nation's overall refining capacity.
Turning to the chart, we see the May RBOB contract appearing to be forming a rounded-top. Prices did manage to bounce off of the 50-day moving average, avoiding a technical setback. Failure to hold the average suggests that prices could slip and test the 3.00 mark. To regain upward momentum, prices will need to close above the 3.40 level. Both RSI and momentum have been moving, diverging from RBOB prices since late February, signaling that a top may be in place.
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