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Heating Oil Gains on Iran Concerns as Obama, Netanyahu Meet

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March 5 (Bloomberg) -- Heating oil rose along with Brent crude and European gasoil as President Barack Obama and Israeli Prime Minister Benjamin Netanyahu discuss how to confront Iran over its nuclear program.

Futures gained as Obama, while asking Israel to help dial back “too much loose talk of war,” said he takes “no options off the table” including a military effort to stop Iran from having a nuclear weapon. Prices have been boosted by concern that tension over Iran’s nuclear research program, which has drawn sanctions, would escalate and disrupt production.

“There’s the big meeting with Netanyahu today, and the ongoing concern of whether Iran is going to back down is boosting prices,” said Phil Flynn, vice president of research at PFGBest in Chicago.

April-delivery heating oil gained 1.56 cents, or 0.5 percent, to settle at $3.2174 a gallon on the New York Mercantile Exchange. Prices are up 9.6 percent this year.

Obama told Netanyahu today that “there is a window” for a diplomatic solution before turning to military action to stop Iran from getting a nuclear weapon. Obama also told the Israeli leader that the U.S. has a “rock solid” commitment to Israel’s security.

Heating oil rose as Brent oil and gasoil advanced on London’s ICE Futures Europe exchange. Brent for April settlement rose 15 cents to $123.80 a barrel. March gasoil advanced $2.50 to $1,013 a ton, while the April contract increased $3 to $1,016.

“Heating oil is following Brent and Brent is up on concerns over potential supply disruptions out of Iran,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoil Supplies

Declining gasoil supplies in Europe indicate more demand for U.S. diesel exports. Gasoil stockpiles in independent storage fell decreased 1.1 percent to 2.54 million metric tons in Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub during the week ended March 1, according to PJK International BV.

“If gasoil is stronger, that would help heating oil,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.

Gasoline slipped as equities fell after U.S. factory orders sank and China cut its economic growth outlook, raising concern about the global economy and fuel demand. The Standard & Poor’s 500 Index fell 0.4 percent at 3:18 p.m. in New York.

Bookings to U.S. factories decreased in January for the first time in three months, figures from the Commerce Department showed today. China pared the nation’s growth target to 7.5 percent from an 8 percent goal in place since 2005.

‘Iran Premium’

“We’ve still got an Iran premium in the market, but we’re fluctuating on low volume and cautiously off a little with equities,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.

Gasoline for April delivery sank 1.41 cents, or 0.4 percent, to settle at $3.258 a gallon on the exchange. Prices have gained 21 percent this year, making it the best-performing energy commodity in the Standard & Poor’s GSCI index of 24 raw materials.

Gasoline’s premium to heating oil narrowed to 4.06 cents from 7.03 cents on March 2.

Regular gasoline at the pump, averaged nationwide, rose 0.3 cent to $3.767 a gallon yesterday, according to AAA data. Prices have increased 15 percent this year, and are 7.8 percent higher than a year earlier.

To contact the reporter 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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