Gasoline breaks key support, targets $2.59

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.

About the Author
Anthony Lazzara

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.

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