Heating Oil Gains as Supplies May Fall, U.S. Home Prices Climb

Heating oil advanced on speculation that distillate fuel inventories fell last week and as November home prices rose by the most in six years, indicating a stronger economy.

Futures gained as the Energy Information Administration will probably report tomorrow that stockpiles of heating oil and diesel fell 500,000 barrels last week, according to the median estimate of nine analysts in a Bloomberg survey. The S&P/Case- Shiller property values index climbed 5.5 percent from November 2011, the biggest year-over-year jump since August 2006.

“The market continues to be supported by positive economic headlines, giving confidence the economy will continue to grow and worldwide demand will increase,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Heating oil for February delivery rose 3.84 cents, or 1.3 percent, to $3.10 a gallon at 1:12 p.m. on the New York Mercantile Exchange. Volume was 7.4 percent above the 100-day average for the time of day.

February heating oil and gasoline contracts will expire at the close of floor trading Jan. 31. The more actively traded March contract advanced 3.51 cents to $3.0894 a gallon.

The March heating oil crack spread increased 56 cents to $32.40 a barrel on the exchange. The discount of February heating oil to gasoil on the ICE Futures Europe exchange increased 0.61 cent to 3.61 cents a gallon at 1:10 p.m., based on the Bloomberg fair-value index data.

EIA Inventories

The EIA is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington. The report will probably show that supplies of the gasoline rose 1 million barrels, according to the survey.

Gasoline for February delivery climbed 2.23 cents, or 0.8 percent, to $2.9571 a gallon the exchange, the ninth consecutive increase. Volume was 22 percent above the 100-day average for the time of day. March gasoline increased 1.93 cents to $2.9602 a gallon.

Today’s gain follows a 2.1 percent jump for February gasoline yesterday after Hess Corp. (HES) said it will shut the Port Reading, New Jersey, refinery at the end of February and sell its 19 East Coast storage terminals. The 70,000-barrel-a-day refinery’s fluid catalytic cracker makes gasoline and components for blending heating oil.

The announcement comes as refineries in Padd 1, which includes New York Harbor, the delivery point for Nymex futures, have units down for repairs and maintenance planned.

Refinery Work

Philadelphia Energy Solutions will shut the Girard Point section of its plant, the largest near the harbor, this month for sixty days of work. A fluid catalytic cracker at Delta Airlines Inc. (DAL)’s Trainer, Pennsylvania, refinery has been shut for repairs since December.

“The Trainer cat cracker is still offline and by this weekend, Philadelphia Energy Solutions be going into maintenance and by the end of February the Port Reading refinery will be shut,” Lipow said.

The retail price for regular gasoline, averaged nationwide, rose 1.5 cents to $3.364 a gallon, the highest level since Dec. 6, AAA said today on its website.

To contact the reporter on this story: Barbara 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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