Heating Oil Futures (NYMEX : HO)

Heating oil, or burning oil, also known in the United States as No. 2 fuel oil or "offroad diesel" and elsewhere as "red diesel", is a low viscosity, flammable fluid used to fuel building furnaces ("boilers"). It is delivered by tank truck to individual homes and stored in tanks in the basement or (possibly buried) in Underground Storage Tanks (or "USTs").

Heating oil accounts for about 25% of the yield of a barrel of crude, the second largest "cut" after gasoline. The heating oil futures contract trades in units of 42,000 gallons (1,000 barrels) and is based on delivery in New York harbor, the principal cash market trading center. Options on futures, calendar spread options contracts, crack spread options contracts, and average price options contracts give market participants even greater flexibility in managing price risk.

The heating oil futures contract is also used to hedge diesel fuel and jet fuel, both of which trade in the cash market at an often stable premium to NYMEX Division New York harbor heating oil futures.

The Exchange also lists for trading on the NYMEX ClearPort trading platform a series of heating oil swap futures contracts based on crack spreads, location differentials, and differentials between NYMEX Division New York harbor heating oil futures and jet fuel and diesel fuel. Transactions in these contracts can also be consummated off-Exchange and submitted to the Exchange for clearing through the NYMEX ClearPort clearing website.

Propane Futures (NYMEX : PN)

Propane is a three-carbon alkane derived from other petroleum products during oil or natural gas processing. It is commonly used as a heat source for engines, barbecues, and homes. Its name was derived from propionic acid.

Propane is a by-product of natural gas processing and oil refining. U.S. demand is approximately one-third that of heating oil. Propane is used in diverse markets: residential cooking, crop-drying in agriculture, space heating in homes and industry, in motor vehicles and as a feedstock for the production of vital petrochemicals. Natural gas utilities often store propane for use during periods of peak demand.

The NYMEX Division propane contract trades in units of 42,000 gallons (1,000 barrels). It provides an effective pricing and risk management tool for the gas liquids sector of the energy industry. The contract is a natural complement to the NYMEX Division crude oil, heating oil, gasoline, and natural gas futures contracts.

Crude oil NYMEX chart

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