Heating Oil May Be the Next Hot Commodity
- Posted by Greg Harmon
- on February 26th, 2014
With the Polar Vortex in the midwest and weekly named storms riding up the East Coast natural gas ($NG_F, $UNG) prices have been soaring. In fact natty gas prices started rising in 2012 before a pause in 2013 ahead of this latest move. And what a move up over 85% since November before this week’s pullback. Some of this is related to the weather of course as there has been a shift of homes in the Northeast over the last 5 years towards heating with natural gas and
away from heating oil. But that may be ready to swing back the other way. AG Web came out with a Petroleum Report: Northeast Demand Drives Heating Oil Consumption two weeks ago that touches on the why. Here is an excerpt:
Strong demand for natural gas fired heat in the Northeast is prompting energy producers to make the switch from natgas to heating oil in response to higher natural gas spot pricing. This could move farm diesel pricing higher near-term. The East Coast is set up to run either natural gas or heating oil, but has been solely focused on natgas fired heat for several years. This year, however, marks a change according to the U.S. Energy Information Administration…
As a technical trader this makes me take a look at heating oil. And the chart bellow shows that there has been a whole lot of nothing going on for 3 years. Of course this can continue this way for a long time without any move higher, but is seems that a catalyst has appeared, so if it is ready to move this is a good time. Time to prepare. And the move leading into the long consolidation suggests that a breakout to the upside would target heating oil prices at 4.80. From the current 3.0 level that is great and it still looks attractive using a trigger of 3.20 as a channel break. Are you ready?
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through February 2014 Expiry and sign up here for the free 7 day trial before you pay.
Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades from Amazon.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Benzinga Premarket Talk Thursday Morning
- A Brief History of Trading and the Trading Stocks
- Premium Earnings 2-26-15
- 3 Reasons the Transports May Need to Refuel
- It Was Hard Saying Goodbye to Ruby Tuesday
- Premium Earnings 2-25-15
- Want to Short the US Market, Then Do it Against Germany
- Pancakes, Glue and Technicals – The Story of PerkinsElmer
- Premium Earnings 2-24-15
- Will the Transports Join the Party?