This data suggests to me that, historically, oil tends to be cheaper heading into the spring, says Terranova. Gas prices, however, tend to rise or stay steady in anticipation of the summer driving season. Consequently, I think these influences will increase the crack spread (the difference between the cost of crude and the cost of gasoline) and boost margins for the refiners.
What’s the trade?
Terranova recommends accumulating positions in refiners heading into MLK day and having them in place by President’s Day. "Hopefully you’ll accumulate profits in March,” he says.
Jon Najarian recommends shorting the refiners into mid-February and then possibly flipping them to the long side.
Just buy the United States Oil Fund (USO) says Jeff Macke. There’s no need to make it any more complicated than that!
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Trader disclosure: On Jan 3, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO); Seymour Owns (F), (MER), (MSFT), (MBI), (INTC); Seygem Asset Managemetn Owns (SSL), (TTM), (CTCM), Gazprom; Gazprom Is On Pink Sheets In The U.S. But Trades On The Exchange in London; Jon Najarian Owns (AGU), (C), (DE), (GS), (MON), (MOS), (MRO), (POT), (GOOG), (YHOO), (VCLK), (DRIV), (SLB), (UBS), (USB), (IM), (N), (NEM), (MOO), (AG), (NYX), (NDAQ); Jon Najarian Is Short (PNRA), (SFLY), (TSO), (VLO), (YRCW); NBC Universal Is The Parent Company Of CNBC; Terranova Owns (SJT)