Harvey Unwind Evaporates Gasoline, Condensing Crude.

Gasoline futures crash as U.S. refinings rapid comeback alleviates the refined crude backlog.

Overnight crude trading was relatively quiet with most of the action occurring in gasoline futures, which slumped nearly four percent as U.S. refining capacity comes back online post-Hurricane Harvey. With almost all the affected refineries now operating, fears of gasoline shortages have evaporated along with its price rally.

WTI spot traded modestly higher by around 15 cents to start Asia unchanged at 47.35 this morning. Brent spot, by contrast, fell by 50 cents over the previous session, trading at 52.25 in early Asia. Traders continued to unwind the multi-year highs in the Brent/WTI spread by selling Brent and buying WTI.

From a technical perspective, Brent spot continues to consolidate at the top of its recent range. It has resistance at 53.10 and 53.45 initially with support at 52.10 and trend line support at 51.60.

Brent Daily

WTI spot closed just above its 100-day moving average and initial support at 47.25. It is followed by 47.00 and then 46.45. Resistance is at 47.60 and 48.00 with the contract likely to be supported by continuing spread unwinding ahead of the U.S. API Crude Inventories’ data tomorrow evening.

The crude inventory numbers this week come out one day later than usual. Both the API and official EIA inventory numbers could well show unexpected buildups against the recent trend of consistent inventory drawdowns. This will probably be a Hurricane Harvey effect, with crude oil stocks going into storage due to the extended refinery shutdowns of last week.

WTI Daily

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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