Gas Trade Turns the Tables

The selling level of crude oil is traditionally the benchmark that determines the prices of gasoline and distillates when they reach the open market.

This year, in a reversal of roles, gasoline futures on the New York Mercantile Exchange appear to be dictating the terms for the price of crude.

As a result, this new relationship may be setting the price for crude oil and gasoline at artificially high levels. Traders with exposure to crude and gasoline futures may be subjecting themselves to unnecessary volatility and price risk, whereas refiners like Frontier (FTO Quote), Tesoro (TSO Quote) and Valero (VLO Quote) are well positioned to profit from the high energy prices. ...