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Heating Oil Caps Biggest Weekly Gain Since July as Brent Climbs

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Feb. 1 (Bloomberg) -- Heating oil futures charted the biggest weekly gain since July as Brent crude advanced and reports indicated the U.S. economy is growing.

Futures strengthened as Brent was boosted by a rally in the euro, increasing costs for refiners using oil priced off the London benchmark and making U.S. diesel exports more attractive. Growth in the U.S. labor and manufacturing markets may give fuel demand a lift as plants begin seasonal maintenance.

“Brent is stronger as the dollar keeps tumbling and the euro keeps rallying,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The whole complex is getting a bid from the economic news and the market is still focused on the high levels of upcoming refinery maintenance.”

Heating oil for March delivery rose 4.19 cents, or 1.3 percent, to settle at $3.1606 a gallon on the New York Mercantile Exchange. Volume was 27 percent below the 100-day average for the time of day.

Prices climbed 2.8 percent in January and 3.4 percent this week, the largest weekly increase since July 20.

Futures advanced as Brent oil on ICE Futures Europe exchange rose to $116.76 a barrel and its premium to West Texas Intermediate crude on Nymex widened 93 cents to $18.99 a barrel. Brent gained as the dollar sank to as low as $1.3711 against the euro, the weakest level since November 2011.

Following Brent

“We’re back to refined products following Brent and ignoring WTI,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

U.S. payrolls rose 157,000 in January following a revised 196,000 advance in the prior month and a 247,000 surge in November, Labor Department figures showed. The Institute for Supply Management’s manufacturing index climbed to 53.1 last month from December’s 50.2, the Tempe, Arizona-based group’s report showed today.

March gasoline rose less than heating oil and its discount to the April contract widened on speculation that near-term supply in New York Harbor is sufficient, even as refinery maintenance and the planned closing of a plant may curtail production.

Delta Air Lines Inc.’s Monroe Energy LLC subsidiary expects to restart the fluid catalytic cracker next week at its Trainer refinery in Pennsylvania, Trebor Banstetter, a spokesman for Delta in Atlanta, said in an e-mail.

Increasing Supply

“Gasoline is under a little bit of pressure with the expectation of the Trainer cat cracker coming back next week, which increases supply in the Northeast,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for March delivery gained 2.19 cents, or 0.7 percent, to settle at $3.0536 a gallon on volume that was 14 percent below the 100-day average for the time of day. The discount of March to April futures expanded 0.34 cent to 15.26 cents a gallon.

Prices rose 6.2 percent this week, the most since the period ended Sept. 28. Futures climbed 7.6 percent in January, the second-best performer on the Standard & Poor’s GSCI commodity index, after cotton.

The retail price for regular gasoline, averaged nationwide, rose 3.9 cents to $3.462 a gallon, the highest level since Nov. 7, AAA said today on its website. That’s the largest one-day increase since Aug. 28.

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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