Welcome to the seasonal switch in the crude complex.
WTI crude futures options for March expired at 2:30 p.m. EST on Wednesday, meaning we’re now moving to the April contract. April means driving season, and a traditional rise in prices across oil and gasoline contracts.
But a funny thing happened on the way here, the /ho led the way up early.
That’s heating oil, which is used as a proxy for diesel as well.
It’s easiest to see the differences when you place their 4-hour charts next to each other.
Heating oil (far right) bottomed for the year while most of the U.S. slept on January 21st.
Both /cl and /rb (gasoline) made short-term lows also on that day, but went on to make lower lows three weeks later, while /ho made a higher low.
In 2015, both /rb and /ho bottomed at the same time before /cl.
The takeaway is that we can determine clues about the more liquid /cl, from the changes and divergences in the refined products.
