Futures gained as weakening U.S. retail sales, a stagnant labor market and an unchanged Consumer Price Index indicated the Fed would have ample reason to initiate a third round of asset purchases, known as quantitative easing, without fear of inflation. Heating oil is traded as a proxy for diesel.
“Investors are looking at the evidence of weak job creation and low inflation as giving the Fed room to move toward another round of quantitative easing,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The CPI came out today. It is flat, so inflation is not a problem.”
Heating oil for August delivery climbed 2.09 cents, or 0.7 percent, to $2.8486 a gallon at 9:59 a.m. on the New York Mercantile Exchange. Prices touched $2.8566, the highest intraday level since May 23.
The cost of living in the U.S. was little changed in June, following a 0.3 percent drop in May, a Labor Department report showed today.
Bernanke is scheduled to deliver his semiannual report on the economy and monetary policy before Congress today and tomorrow. He will begin testimony before the Senate Banking Committee starting at 10 a.m. in Washington.
The central bank under Bernanke, in two rounds of quantitative easing, bought $2.3 trillion of Treasury and mortgage-related debt from 2008 to 2011.
“There is a Bernanke premium going into the price,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Based on recent economic data, the market suggests he’s going to lay the groundwork for a QE3. If he doesn’t talk about stimulus, they could wipe these gains out very quickly.”
U.S. retail sales fell a third straight month in June, Commerce Department figures showed yesterday. The 0.5 percent decline in June retail sales followed a 0.2 percent drop in May.
August-delivery gasoline rose 1.01 cents, or 0.4 percent, to $2.8648 a gallon on the exchange. That’s the fifth consecutive increase, the longest streak of gains since Dec. 27. Prices touched $2.8898, the highest intraday level since May 30.
Regular gasoline at the pump, averaged nationwide, increased 1 cent to $3.406 a gallon, according to AAA. Prices have risen every day but two since July 1, gaining 8 cents. Gasoline reached a year-to-date high of $3.936 on April 4.
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