Monday, July 16, 2007

Has Gasoline Run Out Of Gas?

Above is a seven month daily chart of gasoline, crude oil and heating oil. Over the past six weeks crude oil and heating oil have been trending higher making new highs for the year while gasoline has failed to break high.

Today we saw gasoline fall over 4% and it is now testing the lows from last month.

Below is a weekly chart of gasoline along with the latest commitment of traders report. As you can see the red line (commercial traders) are holding a large short position. The lower the red line, the more of a net short position the commercials are holding. The commercials are also heavily short heating oil and crude oil as well.

If the oil complex does sell off, we'll probably see gasoline leading the way down.


throwaway said...

Kevin, I thought that normally if the large traders were increasing their long positions that that was normally considered a bullish signal?

cep said...

Any thoughts on how the equities will act (OSX, XIO, XNG) now that the craking spreads are coming in as well?

Kevin said...

Hi Throwaway,

The large traders are the trend followers. They are usually wrong near the end of a trend.

The commercials are considered to be the smart money and you want to follow them because they have the best track record.

Hi Cep,
I have no idea how equities will act..we'll just have to wait for more pices of the puzzle to come together.


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