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Bias in Gasoline Remains Down


Yesterday with a lower low and the lowest trade since October 13th, the bias in gasoline remains down. Apparently, the gasoline trade was not impressed with reports from Marathon Petroleum suggesting fuel demand was strong in the third quarter. Adding to the bearish tilt is a decline in August in US gasoline exports from the most recent EIA report. Furthermore, gasoline is likely experiencing indirect pressure from the restart of Russian diesel exports. This week’s Reuters poll projects EIA distillate stocks to decline by 1.5 million barrels and gasoline stocks to decline by 800,000 barrels. Despite the resumption of diesel exports from Russia, the diesel market showed the strongest performance yesterday perhaps because of a wave of cold temperatures in the US. The path of least resistance is down in gasoline which we think is the most vulnerable component of the petroleum complex.

Oil Rig


Just as we were skeptical of the rally last week in natural gas, we are skeptical of the rally in natural gas yesterday. Apparently, the markets saw this week’s US cold temperatures as a potential supply pivot with strong US exports and improving seasonal demand offsetting news of record US production. In fact, given a two-week extension of US cold, a surprise monthly gain on the charts, and potential technical stop loss buying from the December rally beyond the gap filling price.


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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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