Recent crack spreads show ETF investors still profitable
Be an Oil Refiner In Your Spare Time by Brad Zigler
Crack spreads (a measure of oil refining) improved last week, but what does that really mean? And why are ETF investors doing so much better than futures traders?
From Hard Assets Investor (excerpt):
"Upon reading that crack spreads (if you're not familiar with the terminology, see "Time For Crack Spreads") improved this week, one reader lambasted oil companies, saying: "If you can't squeeze consumers on crude, squeeze them at the pump."
Well, consumers and investors can squeeze right back thanks to the exchange-traded fund market. ETF investors, in fact, are now doing better than refiners in the old crack game.
Crack spreads simply represent the proceeds of refining: Crude oil is an input and distillates are the outputs. Refinery profit margins can be roughly approximated by tracking the prices of crude oil, gasoline and heating oil futures. A "3-2-1" crack spread describes the profits obtained by refining three barrels of oil into two barrels of gasoline and one barrel of heating oil. The refining of lighter, sweet crudes such as West Texas Intermediate (WTI) are best proxied by a 3-2-1 spread."
Market Data 
Markets 
AI
