Another Leg Lower for Gas?
Followinga strong start to the year, gasoline futures have seen a sharp correction lowerover recent weeks. The market has shed around 30% from the early June highs, tradingfrom 4.3588 down to around 3.0590 currently. The driver behind the move hasbeen the combination of tighter Fed rates, and more hawkish Fed expectations,and growing recession fears. With central banks tightening monetary policy at aquicker pace, inflation still at excessive levels, and fresh lockdowns inChina, markets have sharply scaled back their demand forecasts for gasoline. Lastweek’s EIA report did little to help prices. The EIA recorded a large, unexpectedsurplus in gasoline stocks. Given that this is usually a time of high demand inthe US, the data has added to the bearish picture for prices currently.
TechnicalViews
GasolineFutures
The sell-offin gasoline prices over the last six-weeks has seen the market correcting lowerwithin a well-defined bear channel. Price is currently being held up at supportalong the 3.004 level. However, with momentum studies still bearish, the focusis on a further push lower with a break of current lows targeting 2.5382. Thiswill remain the view unless bulls can get back above the 3.5046 levelnear-term.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.