Weak demand fundamentals in the US and Europe have driven petroleum cracks down to 12 month lows, forcing refiners to examine operating rates and length of planned turnarounds. High inventories have to be corrected at some point. Unless home heating demand is above average, we will need to see demand pick up in the rail, road diesel, aviation or maritime sectors to see a rebound in crack levels. Meantime, there is an opportunity to use NY heating oil or European gasoil options to hedge upside petroleum exposure in both crude and refining cracks.
Using the NY Heating Oil options (Asian) for a consumer hedge, the Q1 $2.00-2.50 call spread is offered at $0.1250/gallon. Adding a sale of the $1.70 put creates a structured 3-way option strategy for "zero" premium cost.
Please email or call to be added to the consumer hedge tear sheet blast.
New York, Sept 15.
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