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Rally in Heating Oil Futures Bolsters Crude-Oil Prices
NEW YORK -- Heating oil futures rallied Thursday morning, lifting crude-oil and gasoline futures, after an international agency warned about low heating oil stocks in major consuming countries this winter.
Shortly after 10:15 a.m. at the New York Mercantile Exchange, December heating oil was up 3.27 cents, or 3.4%, to 99.2 cents a gallon.
December crude rose 41 cents, or 1.2%, to US$33.65 a barrel. January crude added 37 cents, or 1.2%, to US$32.65 a barrel.
December gasoline climbed 0.43 cent to 87.85 cents a gallon.
In its monthly report released Thursday, the International Energy Agency said it has "serious concerns" about low stockpiles of diesel and heating oil in member countries of the Organization of Economic Cooperation and Development. The Paris-based agency said that although global oil production continued to surge in October, rising demand and transportation and refining constraints are expected to make spot supply shortages "inevitable." It went on to say that supply tightness could be exacerbated by extreme weather conditions and supply interruption.
The report provided little new information. It has been well known for months that heating oil stocks, especially in the U.S. Northeast, a big home heating oil market, are well below levels at this time last year.
Only Wednesday, the Department of Energy reported that along the entire East Coast, heating oil inventories are 43% below last year's levels.
That report caused heating oil futures to spike higher Wednesday and the buying resumed Thursday morning.
According to the International Energy Agency, total oil output by the Organization of Petroleum Exporting Countries rose to 29.52 million barrels a day in October from 29.06 million barrels a day in September. Excluding Iraq, whose production is overseen by the United Nations, OPEC output rose to 26.49 million barrels a day in October, compared with 26.21 million barrels a day in September, thanks to a 300,000 barrel-a-day increase in production out of Saudi Arabia, the energy agency said.
Since 1997, global demand has increase by an average of two million barrels a day a year. It stood at 75.5 million barrels a day for the third quarter of this year, the energy agency reported.
Global demand is seen rising by at least two million barrels a day in the fourth quarter of this year and the first quarter of 2001, to an average 77.9 million barrels a day during the northern hemisphere's winter period.
As a result, spot supply shortages are "inevitable" and could be exacerbated by extreme weather conditions or supply interruption, the energy agency said. In addition, some market participants expressed concerned that Iraq still may disrupt its oil exports. Except for a brief interruption earlier this week, Iraqi exports have climbed in recent weeks, but traders worry that Iraq may halt supplies for political advantage.
On Thursday, the Ceyhan oil terminal on the Turkish Mediterranean was awaiting instruction from Iraq to load an oil tanker, people at the terminal said. Another vessel loaded with one million barrels of Iraqi crude, the first shipment of oil for which Iraq will be paid in euros, not dollars, prepared to leave the port.
Despite the interruption earlier this week, people in the shipping industry expect the regular loading cycle to resume within a few days. Tuesday, Iraq ceased exports in protest over what it saw as a slow U.N. response to its request for payment in euros. So far delays to the November loading schedule have been minimal.
In other commodity markets:
METALS:
Precious-metals futures traded mixed. December gold was down 20 cents at US$265.90 an ounce. December silver shed 0.3 cent to US$4.76 an ounce.
December palladium added US$2 to US$783 an ounce. January platinum rose US$1.70 to US$ 594 an ounce.
Among industrial metals, December copper traded up 0.55 cent to 84.15 cents a pound.
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