Heating Oil Rises to 27-Month High in New York on U.S. Northeast Snowstorm
Heating oil futures surged to a 27- month high on speculation that snowstorms in the U.S. Northeast will increase demand for heating fuel.
Heating oil gained a third day as a storm that dropped more than 9 inches of new snow on New York City pounded Boston with blizzard conditions, disrupting travel and prompting Massachusetts’ governor to declare a state of emergency. The Energy Department reported that heating oil stockpiles fell 1.8 percent last week to a seven-month low.
“The only bullish factor in the report is the draw in heating oil stocks,” said Sander Cohan, an analyst with Energy Security Analysis Inc in Wakefield, Massachusetts. The price gain “comes from traders in New York looking out their window and seeing snow. And margins have been pretty strong.”
Heating oil for February delivery added 0.98 cent, or 0.4 percent, to settle at $2.6186 a gallon on the New York Mercantile Exchange. It is the highest settlement price for the front-month contract since Oct. 3, 2008.
Heavy snow will fall in waves on Boston and eastern New England for the rest of the day, said Alan Dunham, a weather service meteorologist in Taunton, Massachusetts. More than 12 inches fell on parts of the Bronx and northern New Jersey, according to the National Weather Service.
The U.S. Northeast is the largest user of heating oil. East Coast supplies of heating oil slipped to the lowest level since June in the week ended Jan. 7, according to department data.
Total U.S. heating oil stockpiles fell 801,000 barrels in the week ended Jan. 7 to 44.3 million barrels, the lowest level since the week ended June 4, according to department data.
Stockpiles of distillate fuels, including heating oil and diesel, rose 2.65 million barrels to 164.8 million, the highest level in 10 weeks. Analysts surveyed by Bloomberg News projected a rise of 1 million barrels.
Distillate demand, measured by deliveries to wholesalers, fell 4.4 percent to an average 3.57 million barrels a day, the slowest pace in five months.
The heating oil crack spread, based on February contracts, dropped 34 cents to $18.12 a barrel.
Gasoline for February delivery lost 1.53 cents, or 0.6 percent, to settle at $2.4631 a gallon. Futures settled yesterday at the highest level since September 2008 on speculation that refinery shutdowns reduced supplies.
“The gasoline market is starting to realize that we’ve had a lot of regional disruptions that kept these prices high, and that gasoline got ahead of itself,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Gasoline inventories rose 5.08 million barrels to 223.2 million, a 16-week high. The survey projected a 2.1 million- barrel gain. Demand fell 0.4 percent to an average 8.82 million barrels a day, the fewest in 13 weeks.
“People associate snowstorms with higher heating oil consumption but gasoline is down because it also means the people’s cars are sitting in their driveways,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
The gasoline crack spread, based on February contracts, narrowed $1.39 to $11.59 a barrel.
Regular gasoline at the pump, averaged nationwide, rose 0.4 cent to $3.093 a gallon yesterday, AAA said on its website.
To contact the reporter on this story: Barbara Powell in Dallas at email@example.com
To contact the editor responsible for this story: Dan Stets at firstname.lastname@example.org