Morning Futures Roundup

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Early Christmas Present for Drivers?

   Fundamentals
US automobile owners may have something to be thankful for in the coming months, as lower wholesale Gasoline prices should eventually make their way to the pump. Gasoline demand in the US has been anemic, with Gasoline demand falling by 1% last week. For the year, Gasoline demand is down about 5%, with a balance of weaker economic activity and relatively high Gasoline prices accounting for the decline. Last week, US gasoline inventories rose by 4.475 million barrels to 209.634 million barrels, according to the US Energy Information Administration (EIA). This is the highest Gasoline inventory since the end of September, as US supplies are being rebuilt now that several refineries are back online after a period of seasonal maintenance.

Chartwise, lead month RBOB futures are now holding just above the upper level of support near the 2.5000 level. This is the area where prices broke-out to the upside in the first quarter of this year and sparked a nearly one-dollar rally going into the summer. With distillate inventories below the 5-year average and Crude Oil prices continuing to hold, and a risk premium due to political events in the Middle-east, RBOB gasoline futures may continue to lag the energy complex until we start to see some real signs of economic growth, not only in the US, but on a global scale as well.


   Technical Notes
Looking at the daily continuation chart for RBOB Gasoline futures, we notice what appears to be a descending triangle formation. This chart pattern is normally considered a bearish formation that occurs during a downtrend. Prices are also below both the 20 and 200-day moving averages, and momentum as measured by the 14-day RSI has turned lower, with a current reading of 42.27. Support is found near the 2.4450 area, with resistance seen at the recent high of 2.7576 made on November 8th.

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