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Supply issues expected to bring further upside for gasoline after seven-year high


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Supply issues expected to bring further upside for gasoline after seven-year high

Petrol prices break into seven-year high, with rising crude expected to help drive further upside for no lead gasoline.

bg_petrol_pump_843363.JPGSource: Bloomberg
 
 Joshua Mahony | Senior Market Analyst, London | Publication date: Thursday 14 October 2021 

Problems at the pump highlight impact of logistical issues

UK consumers have finally seen the petrol crisis ease of late, with the government drafting in the army to help deliver fuel to forecourts throughout the country.

However, that lack of truck drivers does provide a significant roadblock to supply as we move forward, with the European Union (EU) short 400 000 drivers and the number of UK drivers down 29,000 in the year to March. Certainly many of those drivers will not be transporting fuel, but it is indicative of an environment in which supply is less stable.

With wider inflation also commonplace, people are willing to pay more to stay on the roads. Being a derivative of crude oil, gasoline has an obvious correlation with the likes of WTI. This can be seen below, with the two markets largely moving in tandem.

Energy prices are expected to rise over the coming months as demand gains ground. That should provide the basis for further upside from here, setting the scene for another move into multi-year highs.

GAS_VS_Crude.pngSource: TradingView

 

Looking at no lead gasoline prices, we have seen price break into a fresh seven-year high. To the upside, trendline resistance brings an initial hurdle to overcome.

RB-Monthly141021.pngSource: ProRealTime

 

The four-hour chart is key here, with a reliable uptrend providing the basis for an ongoing bullish outlook. A break below the $2.3214 level brings about a more neutral view.

However, until that happens it looks likely we will see the bulls remain in charge.

RB-4-hours141021.pngSource: ProRealTime
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