Where are heating oil futures traded?

Heating oil futures contracts are traded on the Intercontinental Exchange (ICE) and the New York Mercantile Exchange (NYMEX), which is a member of the Chicago Mercantile Exchange (CME) Group. The contracts can be traded even after the regular trading hours through their electronic trading platforms.

How do heating oil futures contracts work?

The contracts can be traded even after the regular trading hours through their electronic trading platforms. On the CME Group, a heating oil futures contract (HO) settles for 42,000 gallons or 1,000 barrels of the commodity, and the price quotation is in U.S. dollars and cents per gallon.

Why should you trade heating oil?

Trading heating oil also provides a way to bet on global economic growth. As emerging markets expand, many analysts believe that fossil fuel demand will outstrip supply and lead prices higher. Also, newly developed areas often lack natural gas infrastructure and need heating oil as a source of fuel.

How do I trade the futures market?

Traders should also understand the futures market. When you trade a futures contract, you must either buy or sell—"call" or "put"—the commodity by the expiration date at the stated price. If you hold a call, the only way to avoid actually having to take physical delivery of 1,000 barrels of crude oil is to offset the trade before the expiration.