Dwindling supply spikes heating oil prices

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It seems to me that we knew about this one last January. I also recall talk of declining natural gas production back then. Does anyone have any information or ideas on why we haven't heard anything about this all year until now? Also, what are the real reasons for this?

Gasman

Dwindling supply spikes heating oil prices

Dwindling supply spikes heating oil prices Herald staff and wire reports Thursday, December 14, 2000

Prices for home heating oil surged more than 2 percent yesterday even as future prices for crude oil plunged to $25.15 a barrel.

Traders attributed the consumer price hike to a report indicating that supplies, which had been slowly rebuilding, were again in decline.

Supplies fell 5.4 percent, leaving them 27 percent lower than a year earlier, the American Petroleum Institute stated in its weekly release.

``The market has been hit real hard the last couple of weeks'' by the build-up in supplies, said Phil Flynn, senior market analyst at Alaron Trading Corp. in Chicago. ``This will turn things around.''

The gap - wider than the 25 percent deficit in the previous week's report - came after three weeks of gains.

Demand for heating oil rose by a third because of cold Northeast weather.

Heating oil for January delivery rose as much as 2.33 cents, or 2.4 percent, to 98.45 cents a gallon on the New York Mercantile Exchange. Prices still are down 11 percent over the past three weeks because of the inventory gains, though they are 51 percent higher than a year ago.

The most recent Massachusetts data also shows an increase.

Heating oil sold at an average of $1.55 per gallon last week, according to the state Division of Energy Resources. That's the highest mean price since Valentine's Day.

The local price is about 50 percent higher than a year ago.

This year's rally in heating oil prices may have forced local retailers to stock up early, reducing inventories held by refiners sooner in the season than usual, traders said.

That supply may now have been consumed because of cold weather.

``There isn't as much heating oil out there . . . as previously thought,'' said Bill O'Grady, the director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis.

http://www.bostonherald.com/business/business/oil12142000.htm

-- Gasman (-@more.gas.please), December 15, 2000


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