Harvey And Gasoline Don’t Mix Well!

When it comes to analyzing some of these futures charts, it is very easy to manipulate the wave patterns. Turn it to a weekly chart, we get waves that don’t overlap, but then turn that same chart to a daily chart setting, we get completely different wave patterns.

Crude oil plunged this morning while gasoline futures ran to the upside. This sounds logical as Hurricane Harvey hit the core of  Americas gasoline production. 

Hurricane Harvey Has Knocked Out 25 Percent of Gulf Gas Production

The media have proclaimed that Harvey  is a ‘catastrophic’  or ‘unprecedented’ event.  These catch words are  used to keep brainwashing us that the end of the world is coming and not just a hurricane that happened once in 10 years. 

The problem with gasoline and distillate products is that they all need to be run through a refinery, which do get shut down for many reasons, including hurricanes and flooding. Many refineries took early steps to protect themselves, and I’m sure once the flooding subsides things will get back to normal. 

It just proves that the fundamentals of  any asset class can be very unstable and unpredictable. It was no surprise to the people that watched the hurricane coming on their satellite feeds.  Of course, this all helps in chopping down any inventories, which will show up  in prices at the pumps. 

The 2008 peak could be the Cycle degree top, followed by a potential zigzag that still needs to play out.  The 2014-2016 crash did not go as low as crude oil so that gives gasoline a completely different pattern.  Some of these rallies and plunges have lasted 2-3 years, so I don’t think this bull market is going to last much longer than the longest run we have had so far. 

Between $1.10 and $1.30 we have a huge gap that is still open. In a future bear market this big gap will still get closed, but for now this gap is not an issue. 

 

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