Heating oil and gasoline gained as the Federal Reserve indicated it will maintain near-zero interest rates to stimulate growth and refiners reduced output to cut supplies.
Futures rose after Fed officials said yesterday that the benchmark interest rate would stay low until at least 2014. Two refineries in Pennsylvania and one in the U.S. Virgin Islands have been closed because they weren’t profitable.
“The underlying reason products are up continues to be the worries of supplies going forward,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “And there’s the idea that oil prices are going to be supported by easy money.”
February-delivery heating oil rose 3.43 cents, or 1.1 percent, to settle at $3.0535 a gallon on the New York Mercantile Exchange, the highest settlement since Jan. 12. Gasoline for February delivery rose 1.28 cents, or 0.5 percent, to $2.8466.
Fed Reserve Chairman Ben S. Bernanke said yesterday that policy makers may buy more bonds to boost growth, setting the stage for a third round of quantitative easing.
“There’s concerns about refinery outages and the Fed action is still the predominant reason the market is up,” said Phil Flynn, vice president of research at PFGBest in Chicago.
New York Harbor
New York Harbor is the futures delivery point for reformulated gasoline blendstock, or RBOB, and heating oil. The region is facing potential supply tightness after the shutdown of Pennsylvania refineries by Sunoco Inc. (SUN) and ConocoPhillips. (COP)
Hovensa LLC, a partnership of Hess Corp. and Petroleos de Venezuela SA, said on Jan. 18 it will shut the 350,000-barrel-a- day St. Croix refinery in the U.S. Virgin Islands by mid- February. The plant supplies products to the U.S. East Coast.
The Energy Department reported yesterday that U.S. refineries operated at 82.2 percent of capacity last week, an eight-month low.
Futures also gained on speculation the economy is strengthening as orders for U.S. durable goods climbed 3 percent in December, after a 4.3 percent rise the prior month, according to Commerce Department data.
“Everything was up early on decent economic numbers and the fact the Fed is going to keep interest rates low for a long time,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.
Regular gasoline at the pump, averaged nationwide, was unchanged at $3.379 yesterday, according to AAA data.
To contact the reporter on this story: Barbara J Powell in Dallas at email@example.com
To contact the editor responsible for this story: Dan Stets at firstname.lastname@example.org