Rbob gasoline futures made a top extension yesterday. This comes at a time when most energy markets have traded sideways but the price of gasoline has risen. This divergent behaviour usually reflects tightness of supply caused by bottlenecks on the refinery/distribution system. Nevertheless, it is a strong clue that there is trouble ahead for energy market prices, and others. There is further supporting evidence from the price of copper:
This seems to indicate that the general global economic weakness that has been much discussed in the last few months is finally having an effect on industrial commodities. Expect declines, so sell rallies for a few weeks.
This has no particular implications for agricultural commodities which we still think are 'bumping along the bottom' and should be traded accordingly. We also expect that this phase will lead to a period in which prices for Grains, Tropicals etc will experience more sustained price rises, as mentioned here over the last two years - global population growth adds 80m people a year, which is now enough to be considered a 'new fundamental' - it's a new Germany, annually. We expect that next phase to start quite soon (perhaps sometime this year) and will write more as evidence accumulates.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com