Heating oil vs crude oil price

The tracking rule

1 barrel crude = 42 gallons. A $10/bbl crude move equals $0.238/gal in pure conversion. Heating oil retail moves ~$0.24 per $10 crude move within 4 weeks at steady-state. The crack spread (the refiner's gross margin) captures the residual. CME

Winter crack spread

Refineries optimise for gasoline in summer and distillate (heating oil, diesel, jet) in winter. The 3-2-1 crack (3 barrels crude in, 2 gasoline + 1 distillate out) flips to a distillate-heavy mix November to February. When inventories draw, the heating oil crack widens. Spread can add $0.20 to $0.40/gal vs summer.

When heating oil decouples from crude

• Refinery outage. Local cracks widen, retail jumps despite flat crude.
• Distillate inventory draw below 5-year low. Crack expands.
• Crude rallies on geopolitical premium but no distillate impact. Retail lags.

Cross-references

• Wholesale vs retail spread
• NYMEX heating oil
• Crude shock scenario