July Heating Oil over the past few weeks has been pulling back with weather across the country heating up. Technically we have some major support at $2.85 and price is starting to approach that level. Typically in the summer months front month Heating Oil will trade between $2.90 and $2.75. In our opinion we are right in the sweet spot for a great seasonal trade.
Trade Idea: Heating Oil Long January/February This bull spread has a very correlated 5 and 15 year price average pattern. Historically this spread has not traded below $-.020 over the last 28 years. We like the spread around $.040 to initiate the position and $.000 to add the second half. We will risk to historic lows of $-.020. The statistics also support a strong seasonal pattern, over the last 15 years this seasonal spread has won 15 out of 15, 100% win rate. We have an open order GTC to buy this bull spread at $.040.
Days in Trade——29