Opportunities can be found in the refining sector, which tends to benefit from low oil prices. Crack spreads measure the price difference between the sale of finished refined products and the price of crude oil. Thus, crack spreads, or refiner margins, tend to widen with a decline in oil prices. The above graph shows the crack spreads for the US Gulf Coast over the last week. Investors should keep track of the crack spreads while investing in the refining sector. Investors can make a play on crack spreads by investing in the recently launched Market Vectors Oil Refiners ETF (CRAK). However, since the ETF tends to focus on global refiners and not just refiners in the US, investors should account for currency fluctuations while investing in the product.
The greatest deception men suffer is from their own opinions. ~ Leonardo da Vinci
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