NYMEX January RBOB futures settled sharply higher Friday, leading the gains in the oil complex, as a weak fundamental picture took a back seat to a technical move higher.
January RBOB settled 6 cents higher at $2.6621/gal after having bounced off of recent $2.60/gal low.
Jason Holthaus, energy market analyst at CHS Hedging, said after failing to dip below $2.60/gal, RBOB futures garnered strength from a weak US dollar and firm ICE Brent, which widened its premium to WTI to $22.42/b at the settle. That's up 65 cents/b from Monday.
ICE January Brent settled $1.24 higher at $109.15/b. NYMEX January crude ended the session up 84 cents at $86.73/b and January heating oil settled 3.7 cents higher at $2.9807/gal.
"The fundamentals for gasoline are still very bearish so it's hard to see the rally on that but it looks like a technical bounce," Holthaus said.
Analysts also pointed to talk about refinery issues as having supported the rally in RBOB.
Carl Larry of Oil Outlooks said talk of issues with the restart of a heavy crude converter at BP's 405,000 b/d Whiting, Indiana, refinery had helped to prop up RBOB futures.
"Seems like some are saying its delayed to June, others say its on schedule to restart in February," Larry said.
A source familiar with BP's operations Thursday said two of three crude units at the Whiting refinery were operating, with one down since early November for the refinery's modernization project, discounting press reports that two units were down.
A BP spokesman declined comment at the time.
Gene McGillian, analyst at Tradition Energy, said talk that BP is delaying construction at Whiting could have added to the upside in RBOB, but the rally was more likely driven by positive economic data.
"RBOB [was] getting a boost from Brent on some positive Chinese PMI numbers and good industrial production," McGillian said. "Seems like some short-covering on the positive data."
The Shanghai Composite Index surged 4.3%, "setting up a feel-good weekend for all of our friends way out East," said John Kilduff of Again Capital in a note. "China's Manufacturing PMI was shown to be at 50.9, putting the economy in growth territory."
The reading surpassed November's final reading of 50.5, which was the first time the index was above 50 in 13 months. Readings above 50 indicate expansion.
Kilduff noted that the data was a "pleasant distraction" from the so-called US fiscal cliff saga that has dominated market sentiment.
Analysts at Tradition Energy said commodities were broadly higher Friday, but enthusiasm for equities was tempered by the lack of progress by the White House and Congress on the fiscal cliff negotiations. The Dow Jones Industrial Average was about down about 40 points by the NYMEX settle, while the S&P 500 Index was down about 6 points.
