I Was Wrong -- But Instead Of Correcting The Original Post -- Will Post Here -- The Widowmaker

In my earlier post I implied that a shortage of diesel fuel was a proxy for economic health of the US: higher demand for diesel fuel was due to higher truck traffic. In this case I was very, very wrong.

Here's the earlier post:

Making America great: note the price of diesel and the weekly petroleum report (below). Some would consider diesel fuel demand a proxy for the health of the US economy. 

Diesel: I noticed the same thing in the north Texas (DFW) area -- the spread between diesel and gasoline -- if I recall correctly, unleaded regular is selling for $2.34 in the local area; diesel, around $2.99.  See weekly US petroleum report here. Note distillate product increased 6% compared to same period a year ago. From twitter:

"Widowmaker." In trading circles, when the price spread of diesel (distillate fuel) / gasoline widens by a larger-than-normal gap, it is known as a "widowmaker." At this link, and as of moments ago, not behind a paywall.

The "widowmaker" paragraph was not part of the original note -- I added it after the fact -- and that's how I realized I had misinterpreted the data. 

From the linked FT article, this was back in December, 2015:

They call it the oil market’s “widowmaker” trade for a reason.

A popular seasonal oil trade in the United States has just blown up in spectacular fashion, write David Sheppard and Anjli Raval.

The trade, where investors go short gasoline futures and long diesel – in the expectation that demand for the latter will be stronger in winter due to its dual-use as heating fuel – started as normal back in the autumn. US diesel futures slowly moved to a premium over gasoline, first 5 cents, then 10 cents, then 15 cents. It looked like it would keep on widening. In the past three years diesel’s peak premium has averaged about 50 cents a gallon – presenting a tempting opportunities for funds.

But this year it has gone wrong. Temperatures in New York have been unseasonally warm, hitting as high as 18 degrees centigrade earlier this week, reducing demand for diesel in the northeast region that still burns oil to heat many buildings.

Again, that was back in 2015. It will be interesting to see how this plays out in 2018.

But, wow, I love to blog. I learn something new every day. Some days I learn two new things.