Bearish Divergence in Gasoline

Discussion in 'Commodity Futures' started by bettles, Mar 11, 2008.

  1. bettles


    On February 19, April oil closed at 95. April gasoline closed at 273.

    On March 11th, April oil closed at 108, up 14% since February 19. Gasoline on the other hand closed at 271, actually down slightly since February 19th.


    Does this divergence signal an end (at least temporarily) to the bull market in oil?
  2. bettles


  3. nolajy


    i think crude has topped out... I have been saying this since april hit 110-111.. may at 108.74... so far so good...

    The economy and the stock market are both gaining a ton of attention right now and many very wealthy people are losing millions of dollars in the stock market.. they will not sit idle.. they will demand
    1. open the SPR .. strategic petro reserve
    2. World bank intervention of dollar.. will spike dollar..lower oil
    3. Europe not happy about too strong euro.. this is global

    Gas has dropped as crude has rallied.. why not buy gas and sell oil? Gas will spike a ton even if oil drops this summer.. assuming the economy doesn't totally crap out..

    I like being short oil

    or short oil and long gas

  4. bunkinc


    exactly! This is why when you see gas crack negative, it's a gift. like free dough.
  5. so would you be shorting front month crude and longing gas next month out, or would you be shorting crude and longing gas both for front month
  6. My only regret is that I didn't push all the chips into the middle of the table when it happened. I guess the volitility had me spooked, and I figured if it could go a bit negative, it go a lot. As it is, the few spreads I put on have made me some good money so far...
  7. bunkinc


    Negative crack signals top in crude? Perhaps, but at the least, this negative spike in crack shows that spec money getting a bit too aggressive with CL, not withstanding fundamentals. And I very much doubt you will see it neg again.

    How high can gas crack go into upcoming seasonal, not sure and would like to hear from some s/d experts. And also any thoughts on HO. Heat crack just hit close to 25, looks like a sell to me.

    Any rate I will be legging in/out of crack and outright short CL in the near term.. currrently long K crack from ~1.75.

    btw, great call from nolajy last week, but remains to be seen if his reasoning pans out. And add contraction in economy deflationary ultimately (but when?)

    chart shows J crack 60min. (spiking -2.5!) continued with roll to K on exp.
  8. bunkinc


    I just realized that never before has gasoline been at such a discount to heat. Tues saw RBJ .62 under HOJ! This looks like time to buy RB sell HO for JUL or AUG to me...

    May be some money to be made between euro gasoil and HO as well... maybe low risk buy gasoil sell HO.

    Some energy people to weigh in on this? What should have more weight in the gas-heat spread: undersupply euro gasoil (diesel/jetfuel) or oversupply US gasoline?
    #10     Mar 21, 2008