Heating Oil September December Spread
The September December HO / ULSD spread reached a peak of 1.60 cents favor of September over December at the beginning of this month, coinciding with the peak in the flat price for the spot futures for HO/ULSD.
This looks to have been happening at the same time that money managers were covering their net short position in ULSD on the CME. This was also around the time that hurricane Beryl was churning around in the Atlantic basin, raising some concerns about refinery activity, and hence supply.
Since then some demand concerns have arisen, likely leading to some of the weakness in the flat price and the spread curve for HO/ULSD.A slower Non Farm Payroll jobs number earlier in the month is one piece of data suggesting lower demand. Weak Chinese PMI data and diesel demand are likely undermining HO pricing and monthly curve values in general.
Yet, despite the demand concerns, technically the spread is showing momentum that is waning to the downside. This together with the recent lows at -1.00 cents is providing support, suggesting that the spread is bottoming. Below the -1.00 cent support, the next support we see lies at -1.87 cents. Resistance for the September against December lies at +0.34 cents, then at +0.72 cents. The recent major high seen lies above at +1.60 cents
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Disclaimer
This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC and its affiliates assume no liability for the use of any information contained herein. Neither the information nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy LLC
Director at Liquidity Energy
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