The energy markets are mixed this morning. Crude oil futures are down 1.24%, natural gas futures are up 1.12%, and heating oil futures are down .86%. However, it is RBOB gasoline that is the story of the day in the energy markets. DEC 12 RBOB futures are down 2.2%, the market is trading at around $2.70. A much larger than expected build in US gasoline supplies last week of 1.720 million barrels combined with seasonal bearish factors heading into winter all combine for the bears to come out of the woods and amp up the selling in RBOB.
Looking at the chart, we notice that $2.86 was a very key resistance level for this market. Twice in the past two months, RBOB tried to hold above $2.86 and it did not work out. In September, when it reached almost $2.90, the market subsequently rapidly sold off 25 cents in just four trading sessions, hitting a swing low just below $2.60. Now after hitting $2.85 this month, RBOB has started to sell off again. It is down 15 cents from that high. A measured move target to account for another 25 cent down-move is $2.60. Today, RBOB broke through a multi-month uptrend line, and also broke key support at $2.76. The next immediate target for us is $2.64, but ultimately we look for $2.60 to be hit.
Click to enlarge.
