Technically Speaking

August diesel futures closed up 15.10 cents at $2.5048 gallon in the week ended June 16, well above the May high of $2.4234 as momentum reversed direction from lower to higher in late May and early June. The 11-month slide in August diesel prices from a peak of $4.4898 in June of 2022 resulted in a half-off sale in early May 2023. The market responded with vigorous buying that increased open interest by over 21,000 contracts from the May low to June 16. Fundamentally, OPEC continues to cut oil production and Saudi Arabia said it would cut production by one million barrels per day (bpd), starting in July. Refining activity has been limited in the U.S. and the Energy Department reported 102.7 million barrels of ultra-low sulfur diesel supplies on hand as of June 9, the third lowest total for this date since 2010. Technically, the trend remains down for August diesel with resistance at $2.52 a gallon. The recent reversal in momentum at a cheap price level, however, is a sign of bullish potential.

August gasoline futures closed up 9.49 cents at a new one-month high of $2.5885 in the week ended June 16. Like diesel, gasoline prices fell 47% from their June peak of $4.1237 last year, offering almost a half-off price opportunity in early May. A sharp reversal on May 4 turned momentum higher, within the constraints of a sideways trading range that August futures prices have been in since August 2022, roughly between $2.22 and $2.71 a gallon. A close above $2.71, if it happened, would suggest the downtrend is over and prices have potential to trade higher this summer. Fundamentally, 220.9 million barrels of U.S. gasoline supplies as of June 9 is the fourth lowest level since 2010 for this time of year.

**

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grain and soybean futures involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Follow him on Twitter @ToddHultman1

(c) Copyright 2023 DTN, LLC. All rights reserved.