The US Gasoline season typically runs from Memorial Day to Labor Day, normally representing the season of highest demand. It’s also the window when supply/demand pressures can assert substantial impact on price. With that said, it’s been a relatively quiet, uneventful gasoline season to date.
The following chart provides a two year look at US gulf coast gasoline prices (symbol: RB). The second half 2014 price decline was driven by collapsing crude oil input costs. Gasoline’s recent low was recorded at $1.2265/gal on 13Jan15 and the high of 2.1857/gal on 17Jun15, representing a 78% valley to peak price advance this year.
Our target for this move is the $2.40-2.50/gal range. Murphy & Co’s proprietary Overbought vs. Oversold Indicator provides a view of where we stand in regards to gasoline’s price progression.
The Buy and Sell Zones are statistically computed and are intended to convey an opportunity to enter or exit a position or sector. Each gasoline nozzle represents a unique historical snapshot of the indicator, i.e., the largest represents the snapshot from 19Jun15, the next largest end 1Q15, the next end 4Q14, then 3Q14, and the smallest 2Q14. The historical snapshot pattern helps the user to generate confidence in the indicator. While the indicator is not in the sell zone just yet, we expect the pattern will complete before or near Labor Day.
For more on Murphy & Co’s Overbought vs. Oversold Indicators, check out The Trend Beacon.