High Oil Prices Not Translating Into High Gas Prices
- Posted by TheArmoTrader
- on September 25th, 2013
Oil is trading at high levels. WTI Oil hit a new multi-year high in late August and has been over $100 since mid-July. However, despite the relatively high levels in which oil has been trading at, it has not translated over to high gas prices. Gas prices are negative year-over-year and even hit a multi-month low as of late. This is great news for the consumer because it means that there is more disposable income available.
Gas Prices are negative year-over-year (YoY)
You are paying about 35 cents LESS today than you were a year ago. (via AAA)
We hit a new ~8 month low for the average retail gas price.
This is all despite elevated levels in WTI Oil ($CL_F)
Part of the reason why gas prices have stayed so low is because Brent Oil ($BNO), which is a better proxy for determining gas prices, has stayed at relatively low levels.
This has caused the Brent-WTI spread to remain very low.
This has all translated into low Gasoline (actual commodity, not retail) prices. In fact, if RBOB Gasoline ($RB_F) closes below the pennant, it is a major technical break and is potentially setting up for a major selloff. If this gets below ~2.50, we could be seeing a stop all the way to around $2.00.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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