Looking to the Futures
RBOB Gas Party Hosts High Supplies but Demand Ghosted
Gasoline futures traded lower Tuesday with supply outpacing demand in a geopolitical race to lower energy costs. September gasoline futures, /RBU25, settled at $2.0915 per gallon, down $0.0107 from previous settlement.
Global demand for oil is growing much more slowly than in past years. The International Energy Agency (IEA) expects demand in 2025 to rise by about 700,000 barrels per day, the smallest increase since 2009 if the pandemic years are excluded.
In the U.S., economic data also points to weaker fuel demand. The ISM index for July fell by 0.7% to 50.1%, below forecasts.
Imports are also adding pressure. Gasoline imports rose to 100,700 barrels per day in June, the highest in more than a year, with supply coming from Canada, Europe, and Nigeria. These imports have boosted inventories where storage levels are growing faster than they have in three years. More supply and softer demand are keeping futures prices low.
Rising global oil production is also affecting gasoline futures. OPEC+ will increase output by 547,000 barrels per day starting in September, continuing its move to reverse the 2023 production cuts. The IEA says that global oil inventories are building by about 1 million barrels per day and could create a surplus in late 2025 equal to 1.5% of global use. Extra barrels on the market increase the chance that gasoline futures, which often trade higher for near-term delivery than later months, could flatten or even flip lower for the front months.
Traders are closely watching geopolitical tensions around the globe. President Trump has threatened to place new tariffs on countries that keep buying Russian oil, including India and China, as a way to pressure Russia to seek a ceasefire in Ukraine.
Analysts at JPMorgan have warned that large tariffs could cause a short-term supply shock because of Russia’s big exports and OPEC’s limited ability to increase production further. Trump has tied oil prices directly to his strategy, saying, “Putin will stop killing people if you get energy down another $10 a barrel.”
Technicals
September gasoline futures, /RBU25, settled at $2.0915 per gallon, down $0.0107 from previous settlement. Wednesday’s trading opened at $2.09 per gallon.
September gasoline futures are trading between the 50- and 200-day simple moving averages after trading through the 50-day SMA on Friday. The 200-day SMA appears to be providing support to pricing as there hasn’t been a close below that level. The 50-day SMA is at 2.1307 and the 200-day SMA is at 2.0803.
The 14-day RSI is at 43.397% and trending lower, in line with recent price action. It is relatively neutral as it’s been moving between the 40% and 60% thresholds.
The directional movement index indicates a weak bearish trend. The ADX is low indicating no identified trend. The negative directional index is above the positive directional index giving rise to a bearish trend as the negative crossed above the positive on Friday. Both are also moving lower indicating a weakening strength as price action moves horizontally.
The crack spread has been narrowing indicating a decreasing profit margin for refiners which may lead to a lower oil price.
Crack spreads can be charted on ThinkorSwim through the use of Algebraic calculations paired with ticker symbols. The ticker symbols can be the root or the full futures symbol. The calculation and the symbols are listed below utilizing RBOB gasoline (/RB) and heating oil (/HO) futures.
1:1 = 42*/RB-/CL
3:2:1 = (42*/HO+84*/RB-3*/CL)/3 = 14*/HO+28*/RB-/CL
5:3:2 = (84*/HO+126*/RB-5*/CL)/5 = 16.8*/HO+25.2*/RB-/CL
Economic Calendar
Wednesday, August 6th:
2:00 pm ET - Fed. Gov. Lisa Cook and Boston Fed President Susan Collins on panel
MBA Mortgage Applications Index 7:00 AM ET
EIA Crude Oil Inventories 10:30 AM ET
Thursday, August 7th:
8:30 am ET - Initial Jobless claims, U.S. productivity, and U.S. unit-labor costs
10:00 am ET - Wholesale inventories and Atlanta Fed President Raphael Bostic speech
3:00 pm ET - Consumer Credit
Friday, August 8th:
None scheduled
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