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Heating Oil Futures Gain After Report of Decline in Stockpiles

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Dec. 21 (Bloomberg) -- Heating oil futures advanced to a one-week high after a report that stockpiles of distillate fuels fell last week.

Prices gained 2.1 percent after the Energy Department reported that U.S. supplies of distillates, including heating oil and diesel, dropped 2.53 million barrels to 139.1 million. Stockpiles had been estimated to fall 750,000 barrels, the median of 12 analyst estimates compiled by Bloomberg.

“The export market for oil products remains strong,” said Kyle Cooper, director of research at IAF Advisors in Houston. “Production remains high and demand has tapered off, so exports are the underlying support.”

January-delivery heating oil gained 5.93 cents to $2.9087 a gallon on the New York Mercantile Exchange, extending the gain this year to 14 percent. It’s the highest settlement since Dec. 13.

Demand for distillate fuel during the past four weeks was 2.4 percent higher than a year earlier, according to the report.

Gasoline for January delivery rose 4.12 cents, or 1.6 percent, to settle at $2.6199 a gallon on the Nymex. The futures are up 6.8 percent this year after gaining 20 percent last year and doubling in 2009.

Gasoline stockpiles decreased 412,000 barrels to 218.4 million, the first decline in six weeks. Supplies in the week ended Dec. 9 were the highest since March.

Gasoline Demand

The four-week average demand for gasoline, measured by deliveries to wholesalers, was 4.7 percent below a year earlier, compared with a 4.5 percent deficit the prior week.

“The four-week demand is down more than 4 percent from a year ago,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “The support is limited if we don’t see a pickup in demand.”

Oil gained $1.43, or 1.5 percent, to settle at $98.67 a barrel on the exchange, and touched $99.25 after the department reported an inventory decline of 10.6 million barrels to 323.6 million last week.

Regular gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.206 a gallon yesterday, according to AAA data. Prices, which are the lowest since Feb. 22, are 7.5 percent higher than a year earlier.

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

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

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