A New Year rally has not followed through at this point with a near $6 sell off. This week, however, the news regarding natural gas availability in Europe (Russia) has had an important and significant affect on Gasoil prices (US Heat and Jet). The "crack" (difference of distillate prices such as Jet compared to crude) has expanded by over $3 per barrel due in part to the fact that Europeans pay for natural gas and heating oil (gasoil) with interrelated pricing schemes. The prices are interrelated due to switching ability in the heating market.
Additionally, we are seeing strong indications for a cold winter in Europe, which will support this "crack" expansion.
This situation could persist. With this in mind, using some near term gasoil or heating oil call options strategies would be more effective than crude oil. Longer term, we continue to recommend crude oil call spreads.
Please call or email if there is a particular level you are looking to refresh.
New York 16h13
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