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tracking my heating oil commodity

  • 09-04-2014 08:22AM
    #1
    P_Cash
    Registered Users, Registered Users 2 Posts: 722 ✭✭✭


    Which is it

    crude oil wti which is $102

    Or

    crude oil brent which is $107


Comments

  • #2
    Bizness
    Registered Users, Registered Users 2 Posts: 45 ✭Bizness


    Neither of them really, though obviously there is a close correlation between crude oil price and heating oil price because heating oil is derived from crude (heating oil is one of the heavier streams coming from the oil refining column).
    I don’t think there is a European listed heating oil price, there is a US one, forward contracts up to 2/3 years traded on the Chicago Merchantile Exchange or the Intercontinential Exchange. It is based on the price of heating oil for delivery in New York Harbour. Now sure how closely correlated this is to heating oil price for delivery in Ireland/Europe.
    Links here:
    http://www.cmegroup.com/trading/energy/refined-products/heating-oil.html
    https://www.theice.com/productguide/ProductSpec.shtml?specId=201#
    FT has it quoted here:
    http://markets.ft.com/research/Markets/Tearsheets/Summary?s=1072386

    For Europe, the London gas oil contract is used for heating oil I think, (amongst other heavy distillates). It’s physical market is based on heating oil barges delivered in ARA (Antwerp, Rotterdam, Amsterdam). It is used as the pricing reference for all distillate trading in Europe and beyond.
    Link here including prices:
    https://www.theice.com/productguide/ProductSpec.shtml?specId=909#data

    You would have to be a big user of heating oil to hedge your bets with heating oil/gas oil futures, as the margin requirement and spread between the bid and offer price would mean relatively high trading costs.
    IG offer contracts on London Gas Oil and US Heating Oil, but only the near contracts.


  • #3
    bappelbe
    Registered Users, Registered Users 2 Posts: 283 ✭✭bappelbe


    P_Cash wrote: »
    Which is it

    crude oil wti which is $102

    Or

    crude oil brent which is $107

    fyi
    The crude that comes out of the ground in most places is the brent crude, in certain places (notably west Texas) the crude that comes out of the ground has fewer impurities (especially sulphur) this is called West Texas Intermediary (wti). It is normally a slightly higher price as the refining process for low sulphur fuel is easier.


  • #4
    P_Cash
    Registered Users, Registered Users 2 Posts: 722 ✭✭✭P_Cash


    thanks guys, learnt a bit here. .


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