Oil Does Not Have As Much Downside As Experts Think
This morning, the United States Gasoline Fund (NYSEARCA:UGA) is once again trading higher. The UGA is climbing by 0.97 cents to $58.09 a share. The move today in the UGA puts it at a new three year high. Gasoline prices at the pump have steadily increased since late December 2011. The average price of regular unleaded gasoline in the United States is now $3.89 a gallon.
Nearly every trading session when the U.S. Dollar Index futures (DX-M2) are stronger before the opening bell at the New York Stock Exchange (NYSE) they will sell off after the open. Yesterday, and today are perfect examples of this phenomenon. Obviously, we should all know by now that a weaker dollar will ultimately help to inflate the stock markets higher.
Since late December 2011, the major stock indexes have surged sharply higher. While the stock market rallies and inflates higher, oil and gasoline have also been in rally mode. This morning, the United States Gasoline Fund (NYSEARCA:UGA) is trading lower by 0.15 cents to $57.59 a share.
This morning, the United States Gasoline Fund (NYSEARCA:UGA) is trading higher by 0.08 cents to $57.19 a share. The UGA is just $1.00 shy of last weeks 52 week high of $58.16 a share. Short term traders should watch for intra-day resistance around the $57.50 area. Should the UGA pullback intra-day, the $56.80 level will be short term support.
This morning, spot oil and many of the leading energy stocks are pulling back. As you know, oil has been surging higher since mid-December 2011. Yesterday, oil spiked higher after a false report cited a fire in a Saudi Arabian oil field. While geopolitical events and weather can effect energy prices, it is usually the weaker U.S. Dollar that will cause energy and most other commodities to rise.
Crude oil has been surging higher as of late. On December 16, 2011 light sweet crude was trading as low as $92.52 a share. A few days ago crude traded near $110.00 a barrel. This morning, the highly followed and traded United States Oil Fund (NYSEARCA:USO) is trading higher by 0.30 cents to $41.22 share. Oil remains in a very strong uptrend on the daily charts at this time.