Fuel Oil Futures Trading Sees Boost from Increased Demand

Strategic Insights -

WASHINGTON -- A 13.2% increase in demand for distillate fuel oil has led to a surge in fuel oil futures trading. On August 31, 1994, number two heating oil futures for September delivery increased to $0.4939/gal, while October delivery futures rose to $0.4924/gal. West Texas Intermediate crude oil futures for October delivery also saw an increase, reaching $17.56/bbl. The favorable industry and government statistics on inventories and demand have driven the market higher.

Key Takeaways:

  • The American Petroleum Institute reported a large drawdown of distillate stocks last week, contrary to a seasonal buildup.
  • The Energy Information Administration noted a 13.2% rise in distillate demand from a year earlier.
  • Wholesale prices on low-sulfur diesel increased by 0.17* to 54.52*/gallon, while No. 2 heating oil decreased by 0.05* to 53.44*/gallon.
  • October North Sea Brent futures remained unchanged at $16.24/bbl, widening the WTI-Brent spread to $1.32/bbl.
  • The Nigerian National Petroleum Corp. reduced prices on its crude oil exports for September by 5*-13*/bbl.
  • The Port Harcourt refinery, Nigeria's largest refinery, was claimed to be restored to operation, although this has yet to be confirmed.
  • Unleaded regular gasoline futures for September delivery decreased by 0.32* to expire at 50.78*/gallon.
  • October natural gas futures declined 1.5* to $1.586/MMBtu due to a tropical storm in the Gulf of Mexico.

Statistics:

  • The 13.2% increase in distillate demand from a year earlier was reported by the Energy Information Administration.
  • The price increase of $0.11 to $17.56/bbl for October delivery of West Texas Intermediate crude oil futures.
  • The price decrease of $0.0032/gal to $0.5078/gallon for September delivery of unleaded regular gasoline futures.
  • The 0.83* increase in No. 2 heating oil futures for September delivery to $0.4939/gallon.
  • The 0.36* rise in October No. 2 heating oil futures to $0.4924/gallon.

Sources:

  • The Oil Daily, in cooperation with Computer Petroleum Corp.
  • The American Petroleum Institute
  • The Energy Information Administration
  • Nigerian National Petroleum Corp.
  • Reuters