The Energy Market is one of the most viewed and most cited markets in the world. It has geopolitical implications, is a key manufacturing input for most commodities, and tends to promote inflation from raw crude oil prices or refined energy product suites. (Gasoline, heating oil, etc.)
Directional trading by speculators in the oil market will of course occur, but considering the market structure, whales trade. Spread the transaction.
Spread the transaction Purchase one at the same time safety Related security sales feet. The most popular spread strategy for energy trading is the spread of cracks.
The cracks spread
This spread focuses on differences in crude oil prices and prices for sophisticated products such as gasoline and heating oil.
3-2-1 Crack Spread Most cited. This represents the hypothetical profit margins that refineries acquire from raw crude oil converted into refined products.
It is assumed for each three barrels of crude oil. The refinery produces two barrels of petrol and one barrel of diesel fuel (the rest is diesel fuel as everything can’t be converted to petrol for breakdown).
Let’s say we have an example where we didn’t ask ChatGpt to produce for me.
input:
Gasoline costs $2.50 per gallon
Diesel fuel: $2.80 per gallon
Crude: $70.00/barrel
The barrel has 42 gallons
Calculation:
Sold 1 barrel of gasoline: $2.50 x 42 = $105.00
Selling 1 barrel of gasoline: $2.50 x 42 = $105.00 (again)
Selling 1 barrel of diesel: $2.80×42 = $117.60
Total revenue: $105.00 + $105.00 + $117.60 = $327.60
Crude oil cost: 3×$70.00 = $210.00
Crack Spread Price: ($327.60-$210.00)/3 = $39.20 per barrel
Traders will track when to purchase or sell the price of each component and try to defend or improve Profit per barrel Processing crude oil and therefore maximize profits.
I have an 8-year-old girl, a 4-year-old girl, a 1-year-old boy, a fairly unstable, but flexible 8-4-1 that spreads out to work together and manage every day.
In this case it’s not locked better Profit per barrel It has a sophisticated trading strategy. It’s about optimizing a way to squeeze the extra 30 minutes of peace and tranquility per day during summer vacation!
Using highly technical tools and strategies, you can adjust your portfolio if volatility and carry costs break out of the line –
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Crying 1 year old: “Get the ball! Yeeee!”
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To 8-year-old eyeroll: “Cleaning your trip to Target on Saturday or no trip”
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To a gross 4 year old: “Get a snack and wear Spider-Man.”
Each movement was highly tuned so that the product redistributes its decibel levels to an acceptable extent after gaining knowledge through brute force trial and error experience.
I know when to fade the market – walking slowly as they play together, creating free time, or when setting up a backyard sprinkler and complaining despite having a room full of toys filled with “I’m bored!”
After all, it is an art, not the science of managing this caliber spread portfolio.
What is your spread? How do you manage it?
Are you interested in joining the Trader Papa Podcast in 2025? Shoot the email! I want you to sit for discussion
thought? question? comment?
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