Another Leg Lower for Gas?
Following a strong start to the year, gasoline futures have seen a sharp correction lower over recent weeks. The market has shed around 30% from the early June highs, trading from 4.3588 down to around 3.0590 currently. The driver behind the move has been the combination of tighter Fed rates, and more hawkish Fed expectations, and growing recession fears. With central banks tightening monetary policy at a quicker pace, inflation still at excessive levels, and fresh lockdowns in China, markets have sharply scaled back their demand forecasts for gasoline. Last week’s EIA report did little to help prices. The EIA recorded a large, unexpected surplus in gasoline stocks. Given that this is usually a time of high demand in the US, the data has added to the bearish picture for prices currently.
Technical Views
Gasoline Futures
The sell-off in gasoline prices over the last six-weeks has seen the market correcting lower within a well-defined bear channel. Price is currently being held up at support along the 3.004 level. However, with momentum studies still bearish, the focus is on a further push lower with a break of current lows targeting 2.5382. This will remain the view unless bulls can get back above the 3.5046 level near-term.
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Written by James Harte
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.
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