Gasoline record on the way?

April 25, 2016 12:51 PM

Fundamentally, consumers are using unleaded gasoline currently at a clip that is well ahead of last year at this time. In fact, before it's all said and done, we could have an all-time record year in terms of demand for the bi-product of crude oil.  

Prices for WTI crude oil itself are low enough now that we are exporting our black gold out of the Gulf Of Mexico to countries like China, Germany, and France. Not surprising considering we frack and drill the highest quality in the world.

Technically, on the daily chart below I have placed my favorite technical indicators.  I call this combination of indicators the "10/20/50/BB/ Trend Finder" strategy. They are the 10-day Simple Moving Average (SMA, red line), the 20-day Simple Moving Average (SMA, green line), and the 50-day Simple Moving Average (SMA, royal blue line). I have also added the Bollinger Bands (BBs, light blue shaded area) and Candlesticks (red and green bars with the wicks).

At the current price for WTI crude oil on the daily chart below, the market is holding just above the near term support of the 10-day SMA. Notice the 10-day SMA has recently crossed up and over the 20-day SMA which was the start of a PRINCIPAL TREND up. 

This PRICIPAL TREND up occurs after the 10-day SMA crosses up and over the 20-day SMA. The PRINCIPAL TREND up continues as both indicators point upward on fairly sharp angles and the market uses the 10-day SMA as support, bouncing up and off of he indicator to make new highs each time the markt pulls down.

My indicators on the daily RBOB unleaded gasoline chart below show me a market that is poised to make new highs if it can close above the previous high. As it stands now, after five up days out five trading days and a cross of the 10 day SMA up and over the 20-day SMA the first two items of a PRINCIPAL TREND have occured; the cross and the support.

About the Author

Matt McKinney is a full-service options broker at Zaner Group both buying and selling energies, metals, grains, softs, currencies and the 30-year bond market. My strategies include time frames of 45-120 days with the ability to liquidate at any time. I can be reached at mmckinney@zaner.com.

Whether you're a novice trader who wants to participate in options on futures or an experienced trader, you can also check out my blog at http://www.mmckinneyfutures.com/.