Heating Oil futures (HO) at CME Group allow you the opportunity to profit from or hedge against the price movements of this refined byproduct of crude oil.
More than 8 million homes in New England and the Central Atlantic region lack access to natural gas and depend on heating oil for energy during the coldest months of the year.
However, the heating needs of these households take a backseat to the gasoline demands of the nation, as both are byproducts of crude oil and must share the services of refineries already running at capacity.
The juggling of the capabilities of oil refineries coupled with the seasonal factors that impact heating oil’s demand make the trade in HO a dynamic and beneficial marketplace for a variety of speculators and hedgers.
Each Heating Oil futures contract represents 42,000 gallons of heating oil with a minimum price fluctuation of $.0001 per gallon, or $4.20 per contract. The contract trades Sunday-Friday from 5 p.m. to4 p.m. Central Time (CT) with a daily 60-minute break at 4 p.m. CT.
Trading the Market
Traders of HO should be alert to the factors impacting the price of heating oil such as: weather, the price of crude and the capacity of oil refineries.
As heating oil is used for heating, the demand for the product rises as the temperature drops. Indeed, heating oil is one of the most seasonally impacted of all the commodities; market participants should monitor news about weather and oil in order to best seize profit opportunities and hedge against risks in the heating oil market.
Peter Knight Advisor