Gasoline Futures Signal Further Relief At The Pump

man pumping gasGasoline futures have been falling for several months, bringing delight to drivers across the country. Recently, RBOB Gasoline fell below the key level of $2.45. RBOB dropped sharply after breaking that technical level in September, falling to a 4-year low at $2.13.

The term structure of RBOB is rather flat near $2.15 through the winter months. Check out the various futures contracts in the table below.

gasoline futures term structure

 

A rule of thumb is add $0.65 to the spot gasoline futures price to get the expected national retail average for regular gasoline – this currently sums to about $2.80 per gallon. Sub $3 per gallon gas is a welcome development to consumers as the holiday season approaches. The national retail average for a gallon of regular gasoline is $3.05 as of this writing, according to gasbuddy.com (see chart below). We are on pace to cross below $3 right near Halloween (what a treat!).

gasoline national retail average price chart gasbuddy

What do the charts say about RBOB gasoline? We can view the 10-year weekly chart to see a defined $1 range in which RBOB traded from early 2011 through the summer of 2014. If we take the $1 measured move off of $2.45, the price objective would be $1.45. It would be quite a move to see RBOB prices cut by another 1/3 in price from here. Consumers surely would not complain if retail prices fell all the way down to the low $2’s.

Gasoline Futures 10 Year Chart

gasoline futures technical price breakdown september 2014

 

No position in any of the mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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