Heating oil U-turns in NY

19 August 2009

Heating oil prices moved lower in New York this morning, tracking a slump in crude oil prices.

Heating oil prices performed a U-turn on the New York Mercantile Exchange this morning (August 19th), wiping out nearly two-thirds of the gains seen yesterday during electronic trading ahead of the market's physical opening later today.

By 04:23 Eastern Time, the September delivery heating oil contract had fallen to $1.8423 (£1.12) a gallon, down 2.2 cents on yesterday's settle price.

The contract had climbed sharply yesterday - closing 3.8 cents up on the gallon - while crude oil prices also surged.

However, as crude moved below the $69-a-barrel mark this morning, wholesale heating oil prices also dropped.

Both movements were provoked by a day of weak trading on the Shanghai Stock Exchange which sparked fears that the world's second largest national economy may take longer to recover than analysts had hoped.

Meanwhile, traders will also later today look to figures from the Energy Information Administration which will show how demand for crude and products such as heating oil, diesel and propane held up in the US last week.

In both the US and the UK, demand for heating oil increases sharply during the autumn and winter, with prices often lower during the summer months.