Larry Livingstone

Expect Oil's 'Crack Spread' to Widen

Reason why the crack is widening today, in my opinion ($2 up to $12.35 for the front month) is that front month WTI is undervalued...you can infer it from the WTI-Brent spread hitting a low of -$2.35 (versus a normal average of positive $0.7) and the contangon widening again to around $3.00...every time this has happened in the ast few months it switched back with WTI increasing (look at WTI at $35 on 1/15 as a perfect example...the crack hit $13.9 then)

Winter Heating Oil, Nat. Gas and Crude Oil Preview

Hi Tim, good article. Isn't the crack spread for gasoling also interesting here? December is currently at $3.27 which is more than a dollar below the cash operting cost to refine...why would the refiners work at a loss?
Also, do you know if there is an exchange out there that lists a spread between Natural Gas and heating oil? That ratio is around 45% lower than the hostroical norm and with 85% historic correlation, should revert to the mean over time...