With the news that the Seaway pipeline will be reversed from Cushing OK to the refiners of Louisiana two weeks earlier than expected, coupled with the easing of tensions with Iran, ICE Brent crude traded significantly lower. These factors sent RBOB tumbling yesterday.
There are a few other fundamental factors that may pressure RBOB. Using the numbers from the EIA 4-week average of U.S. gasoline, demand is down 4% year over year. Reports that Libya’s daily production has risen to 1.45 million barrels a day is coming closer to prewar levels of 1.7mbd is encouraging.
This has set June RBOB up for a test of the 316.20 level. Any talk of lower energy prices going into the summer one must be aware of geopolitical risk that can occur at a moment’s notice. That having been said, I feel we can test the first level and then look to trade down to the 301.1 area.