Gasoline leading the charge

Perhaps this bull market in Oil we have seen is attributed to the SPX behaving a little looney recently. The real strength lies in the Gasoline market. Readers will know SFOT had pointed out the strength in demand/supply in the US market. However, a look in the European Gasoline market tells a simlar story. One should note, and experienced oil industry players will know that Europe is a net exporter of Gasoline and importer of Diesel. Gasoline stocks in europe has followed a similar pattern in the US, i.e declining fast. Exports from Europe to US usually helps to ease US shortage in the driving season, however, SFOT hears that other region like Africa are also taking Gasoline from Europe now. This could potentially leave gasoline vulnerable for more upside surge. SFOT will be watching this space very tightly, but with flat price higher in general, this is slowing Gasoline's outperformance vs crude. The climbing backwardation in US Rbob is certainly another confirmation of the bull trend in this part of the barrel yet.

Jun/Sep Rbob spread
ARA gasoline inventories