Heating oil advanced to an eight-week high as rising U.S. factory output and increased homebuilder confidence indicated greater demand for transportation fuel.
Futures gained as the National Association of Home Builders/Wells Fargo confidence index climbed 6 points to 35 this month, the biggest gain since September 2002. Factory output rose 0.4 percent last month after declining in May, Federal Reserve data showed. Heating oil is traded as a proxy for diesel used in trucks and trains.
“The home numbers have been getting a little bit better and an improvement in the manufacturing side should give heating oil a little bit of a boost,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Heating oil for August delivery rose 1.45 cents, or 0.5 percent, to $2.8422 a gallon on the New York Mercantile Exchange, the highest settlement for the front-month contract since May 22. Prices have climbed five straight days, the longest stretch of gains since Oct. 14.
Manufacturing, which makes up about 75 percent of total production, climbed 0.7 percent last month, reversing the prior month’s decline.
Prices also advanced as September-settlement Brent crude rose 63 cents to $104 a barrel on ICE Futures Europe exchange, the highest level since May 29. A higher Brent price increases the cost of shipments of fuel from abroad and imported oil used at U.S. refineries.
“The Brent market is going into offshore maintenance and Brent is surging here,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “Industrial production was a pretty good number.”
Heating oil pared gains and gasoline reversed its advance after Federal Reserve Chairman Ben S. Bernanke disappointed investors by not giving specific indications in testimony to Congress of when and how the Fed would act to boost the economy.
Bernanke said progress in reducing unemployment is likely to be “frustratingly slow.” He repeated the Fed is ready to act to accelerate the recovery. Prices rose earlier in anticipation he would indicate specific steps.
“His comments just leave his options open and any market expectations of a definitive action were dashed,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Since he hasn’t said anything definitive, the market might feel this was his last chance to announce something prior to the presidential election.”
Bernanke is delivering his semiannual report on the economy and monetary policy before Congress today and tomorrow. 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.
“Bernanke disappointed traders who had anticipated a quick return to easy money,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
The Energy Department will probably report tomorrow that U.S. gasoline supplies rose 1.2 million barrels last week, a Bloomberg survey of nine analysts showed. That would be the sixth consecutive increase. Distillate stockpiles also increased 1.2 million barrels, according to the survey.
August-delivery gasoline declined 0.87 cent, or 0.3 percent, to settle at $2.845 a gallon, the first loss in five days. Prices touched $2.8898 before Bernanke’s comments.
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.