Saturday, July 13, 2013

Unleaded Gasoline on the Move

by Dan Norcini
Trader Dan Norcini

I have been watching developments in the crude oil and unleaded gasoline markets with a great deal of interest. This week’s numbers from the EIA and other private sources shocked the market due to the extent of the drop in crude at Cushing and sent both markets on a tear higher. Crude is now trading close to $106/bbl as I write this and unleaded gasoline has pushed above the $3.10 mark (remember – that is a wholesale price not the pump price).
Frankly I do not see the US economy as strong enough to support either crude or unleaded gasoline at current prices but right now hedge funds are driving these markets higher and the momentum is strong to the upside. There certainly is no shortage of WTI from what I can see but a goodly portion of it appears to be leaving the US via exports to the EU and elsewhere.
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