Heating Oil Advances on EU Ban of Iran Oil, Refinery Shutdowns

Heating oil rose on speculation that Europe will import more diesel from the U.S. as European Union foreign ministers agreed to ban oil from Iran starting July 1 and European refiners shut plants.

Futures climbed as much as 1.4 percent after the EU ministers’ decision today. Iran has threatened to close the Strait of Hormuz, which carries about 20 percent of the world’s traded oil, if sanctions are imposed. Petroplus Holdings AG (PPHN) and LyondellBasell Industries NV (LYB) have idled refineries in Europe.

“European distillate demand is over twice that of gasoline,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “We’ve already had a significant loss of distillates in Europe because of the Petroplus refinery shutdowns.”

February-delivery heating oil rose 3.19 cents, or 1.1 percent, to $3.0203 a gallon at 10:55 a.m. on the on the New York Mercantile Exchange. Futures have increased 2.9 percent this year.

Petroplus, Europe’s largest independent refiner, has shut three plants and is operating two others at reduced rates. Petroplus, trying to avoid bankruptcy, has asked for its shares to be suspended from trading.

Lyondell has decided to shut the 105,000-barrel-a-day Berre refinery in France after failing to find a buyer.

Euro Gains

Futures also rallied after the euro gained against the dollar as EU finance ministers met in Brussels to discuss new budget rules to ease the region’s debt crisis. The euro advanced 0.9 percent against the U.S. currency at 11:04 a.m. in New York. The Standard & Poor’s 500 Index was up 0.3 percent.

“The dollar is under pressure and the stock market being up a little is why we’re holding our gains,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline for February delivery rose 1.36 cents, or 0.5 percent, to $2.798 a gallon on the exchange.

Regular gasoline at the pump, averaged nationwide, fell 0.2 cent to $3.383 yesterday, according to AAA data. Prices were 8.7 percent higher than a year earlier.

To contact the reporter on this story: Barbara J. Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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