HEATING OIL D

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GENERAL OVERVIEW OF HEATING OIL MARKET

ISSUE DATE: MAY 11, 2006

Heating oil at HEC would normally be considered a top but we have indications that the current cycle series (C lines are centre points of these cycles) are about to be ended by a break up through HEC, starting a new cycle series very steep in angle, or in price terms, steeply rising prices for at least 2-3 months.

So, HEC is the boundary line that will determine if a top is made, but if it is seriously broken on the upside, expect a rapid rise. Breaks over HEC lines are almost always clear cut with an open over the line and often a gap day. Such a break may take a few days, although the price action from the May 4 bottom indicates heating oil is in a big hurry to get somewhere. Note the two gaps already since May 4.

If a break doesn't occur within the next week and price starts to weaken, we should see a fall back into IC2.