RBOB Gasoline Continues to Push Higher

On February 12, 2014 by TradingDesk

RBOB gasoline continues to push higher, buoyed by both seasonal and technical influences, and has just breached its 200 day MA. If prices can hold above that key level of resistance, the March contract has an upside objective of $2.85, which would complete the “W” trading pattern that began in December, while the forward months should move north of $3. Ethanol RINs have surged past 50 cents this week, which is adding to the bullish tone for RBOB prices as it will discourage gasoline imports – and encourage exports – to avoid the costly RFS obligation associated with producing or importing gasoline in the US. A delay in the EPA’s ruling on 2014 RIN obligations, and an open export window to Europe have taken most of the credit for the surge in RIN values, but several investment houses have released reports suggesting this is a short term move, and not a repeat of last year’s wild run north of $1.40/RIN.

ULSD values are moving modestly higher, but are lagging the strength in the other contracts. Technical studies remain neutral for diesel prices, despite another winter storm hitting the East Coast that should be bullish for diesel demand – particularly since the region’s natural gas infrastructure has proven woefully inefficient during this stretch of harsh weather – and bearish for gasoline demand from Georgia to New York with many areas expecting a foot of snow.

Both WTI and Brent are moving higher this morning, aided by another draw in US Stocks reported last night by the API, and on a report that Chinese imports of crude are accelerating once again.

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