When it comes to crude oil, many different pieces make up the overall picture that is the international price of the commodity. Most people focus on the nominal price of crude oil; in the U.S., the active-month NYMEX crude oil price is the metric that commands a lot of attention. Prices are generally determined over time because of supply and demand fundamentals. Most consumers do not require or purchase raw crude oil - they buy and consume oil products. Therefore, we can observe demand characteristics by watching the price action of oil products like gasoline, heating oil, diesel fuel, jet fuel and others. During the first quarter of 2015, oil product prices diverged from crude oil prices. The products outperformed the raw crude.
A huge increase in crack spreads during Q1
Crack spreads in crude oil are processing spreads. They reflect the economics of refining a barrel of crude oil into a barrel of oil products. There is a strong seasonality in these spreads. As one could imagine, gasoline cracks are weakest in winter and strongest during driving season - spring and summer.
