February RBOB prices have started the new trading week in a positive track, with prices reaching the highest level since November 9th. Gasoline prices are garnering some support from fears of conflict in the Middle East, but the bulls have added resolve because of a favorable macroeconomic condition. With EIA inventory data recently showing an unexpected decline in US gasoline supplies and demand views slightly improved overnight, one might suggest that the bull camp has support from both the supply and demand front this morning. We think that recent volatility in ethanol profit margins and the end of the ethanol subsidy has also been providing support to gasoline prices over the last several weeks. While many might want to downplay the importance of the end of the subsidy for ethanol, traders should expect to see a noted increase in RBOB price volatility in 2012 because of the potential to periodically idle up 2% to 4% of the US gasoline additive supply chain. The Commitments of Traders Futures and Options report as of December 27th showed non-commercial traders were net long 56,048 contracts, an increase of 6,094 for the week. Non-commercial and nonreportable traders combined held a net long position of 63,053 contracts, an increase of 9,811.