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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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A Shift in Sentiment for October Gasoline Futures?

Gasoline Futures Outlook

This week’s technical chart pattern and a slight change in the fundamentals may be indications of an impending shift in sentiment for October Gasoline futures. At the same time, the price action and fundamentals remain bearish for crude oil.

Further evidence that gasoline may be poised to rise while support for crude oil continues to erode was seen in this week’s widening of the crack spread. The crack spread is a rough measure of the profit from processing a barrel of oil into gasoline. Just like some professionals trade the price differential between Brent Crude Oil and WTI Crude Oil, they also trade the relationship between gasoline and crude oil.

This week, the crack spread moved from $16.67 a barrel to $18.15 on August 6. On July 24, the spread was at $16.08. Its lowest level since February. This price movement also corresponds with the time period when stories started to circulate about a possible early shutdown for refinery maintenance.

Falling gasoline prices since late June have cut into refinery profit margins leading some to curtail production and shut down earlier than usual for maintenance. This should lead to a decrease in gasoline inventories, however, demand for crude oil should drop, leading to further increases in inventory and the possibility of lower prices.

This week, the Energy Information Administration (EIA) reported that gasoline inventories fell to 213.8 million barrels in the…

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