Heating Oil Futures Decline on Bernanke Remarks, Demand Concern

Heating oil fell as remarks by Federal Reserve Chairman Ben S. Bernanke gave no signal that the U.S. central bank would provide more monetary stimulus and on concern that fuel demand won’t improve.

Prices slipped a third day as Bernanke, noting lower unemployment while oil prices rise, said “it will be especially important to evaluate incoming information to assess the underlying pace of economic recovery.” Total fuel demand over the past four weeks was 6.2 percent below a year earlier, according to Energy Department data.

“Demand is still pretty weak even with the stock draws last week in both gasoline and diesel,” said Sander Cohan, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts. “Crude oil remains high and high prices are going to swamp any demand growth.”

March-delivery heating oil fell 3.58 cents, or 1.1 percent, to settle at $3.188 a gallon on the New York Mercantile Exchange. Prices rose 4.1 percent this month and have advanced 8.6 percent this year.

March gasoline and heating oil futures expired today. April-delivery heating oil fell 1.42 cents to $3.2059 a gallon.

While describing “positive developments” in the labor market, Bernanke said “the job market remains far from normal” during the first day of his semi-annual monetary policy report to Congress. He said a recent rise in gasoline prices “is likely to push up inflation temporarily while reducing consumers’ purchasing power.”

Distillate Supplies

Supplies (DOESDIST) of distillates, including heating oil and diesel, fell 2.07 million barrels last week to a nine-week low of 141.4 million as refiners cut production to the lowest level since May. Daily demand jumped 11 percent from a week earlier, and on a four-week average was 5.1 percent below last year.

Before Bernanke’s comments, heating oil was up as gross domestic product climbed at a revised 3 percent annual rate, the most since the second quarter of 2010, Commerce Department figures showed today.

“GDP was good, which plays into the U.S. economic recovery story,” said Phil Flynn, vice president of research at PFGBest in Chicago.

Gasoline for March delivery rose 0.22 cent to settle at $3.0423 a gallon on the exchange. Prices gained 5.4 percent this month and are up 13 percent in 2012.

The April contract gained 3.25 cents to settle at $3.2572 a gallon.

Gasoline stockpiles fell 1.6 million barrels, the biggest drop since Nov. 4, to 229.9 million as output fell 1.4 percent. Demand (DOEDMGAS) slipped 3.1 percent and consumption over the past four weeks was 6.7 percent below a year earlier.

Regular gasoline at the pump, averaged nationwide, rose 1.5 cents to $3.731 a gallon yesterday, according to AAA data. Prices, which have increased 45.3 cents this year, were 11 percent higher than a year earlier.

“The rapid run-up in prices is going to continue to dampen demand on a year-on-year basis,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

To contact the reporters 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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