Gasoline a Buy?
Source: Seeking Alpha, Brad Zigler (1/19/10)
"February through May is typically the best time for crack spreads. . ."
February through May is typically the best time for crack spreads (selling crude oil contracts against the purchase of gasoline and heating oil futures). During this run-up to the summer driving season, gasoline prices usually rise relative to heating oil and other distillates.
Heating Oil (HO) and Gasoline (RBOB) Cracks
Technically, the gasoline market doesn't seem to possess upward momentum, now. After all, March gasoline's about 11 cents off its recent peak and several indicators flashing red: stochastics, MACD and RSI all point south.
With gasoline still trading above its key moving averages, though, some traders think those signs are just announcing a sale on gasoline that's not likely to be repeated for some time to come. Over the past four years, gasoline's risen an average of 33.8 percent between Feb. 1 and May 31:
March gasoline settled at $2.0863 on Friday. A close above $2.1163 would confirm that a short-term low's been posted. That would put the next level of significant resistance at the January high of $2.2009.
For those investors chary of the futures market, an alternative investment is the United States Gasoline Fund (NYSE Arca: UGA), which closed out at $36.31 on Friday. Momentum buyers would likely be stirred by a close above $37.40.