As we head into Memorial Day, drivers are experiencing the lowest gasoline prices since 2008. So what explains the weakness?
Refiners are running strong, strong demand for gas has yet to materialize, and supplies outside of the Northeast are good. Couple that with weak numbers out of China on Monday, and you can see why demand for crude will be lagging.
I do not foresee low prices all summer long. After all, demand is expected to increase, and refiner problems are always at risk of cropping up. But by the same token, I do not see $4 gas on the horizon. Sure, we might get a few pockets around the country, but overall, it looks like smooth sailing (or driving).
So what levels am I looking at?
On the downside, I would buy at the $2.75 to $2.70 level. Indeed, gasoline has found solid support here. And as far as the upside goes, I would sell out of my position at $2.90.