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By New_Deal_democrat February 11, 2015 1:12 pm
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So far, gas following past pattern of rebounding off a bottom

One month ago I wrote that the bottom in gas prices was close (http://bonddad.blogspot.com/2015/01/the-bottom-in-gas-prices-is-close.html).  Last week I wrote that it looked like the bottom had been made during the last week of January (http://community.xe.com/blog/xe-market-analysis/us-gas-prices-have-proba...).

I noted in both articles that in the past, once gas prices made a bottom, they tended to be rebound quickly during the first month thereafter, rising on average by about $0.25 - $0.30 a gallon.  Here's my argument one month ago:

"[I]t looks likely that there will be a further decline to about $2/gallon by late January.  The seasonal low is normally set by that time.

"If my surmise is correct, then if we follow the patterns set previously at important declines, there will be a quick rebound of about $0.25 to $0.30/gallon, followed by a slower increase into late spring or early summer of about $0.90 to $1.25/gallon.  A good rough estimate is $1/gallon, which would put us at about $3/gallon sometime between early May to early July."

Here's a graph of gas prices for the last 10 years illustrating the quick increases off of the wintertime bottoms:

So far, gas prices are behaving as they have in the past when a bottom has been made.  Here's this morning's update of gas prices over the last month from GasBuddy (http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24):

Gas prices have risen by $0.18 since their likely bottom on January 26, over half a month ago.  Based on past experience, by the end of February they should be about $2.30/gallon, and if the normal annual pattern is followed, should top out at roughly $3/gallon by late spring or early summer.

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