Heating Oil Prices Experience Volatile Day Amid Cold Weather in Northeast

Strategic Insights -

The Northeast's cold weather sent heating oil prices skyrocketing initially, with No. 2 heating oil futures for March delivery gaining as much as 1.62*/gallon on the New York Mercantile Exchange. However, the gains were short-lived as heavy selling pressure led to a sharp decline, with the contract ultimately increasing by only 0.60* on the day to 50.28*/gallon. Spot markets also experienced a wild ride, with prompt prices at New York Harbor rising 1.5*/gallon before plummeting 2*/gallon lower than Friday. Meanwhile, wholesale distillate prices rose modestly, with No. 2 increasing an average of 0.20* to 51.30*/gallon and low-sulfur diesel rising 0.32* to 53.37*/gallon.

Key Takeaways:

  • No. 2 heating oil futures for March delivery gained as much as 1.62*/gallon on the New York Mercantile Exchange, before sliding back down to an increase of only 0.60* on the day to 50.28*/gallon.
  • Spot markets experienced a significant price surge, with prompt prices at New York Harbor rising 1.5*/gallon before dropping 2*/gallon lower than Friday.
  • Wholesale distillate prices rose modestly, with No. 2 increasing an average of 0.20* to 51.30*/gallon and low-sulfur diesel rising 0.32* to 53.37*/gallon.
  • April West Texas Intermediate crude oil futures initially rose as much as 24*/bbl due to stronger distillates, but ultimately ended the day down 9* at $14.48/bbl.
  • The Organization of Petroleum Exporting Countries (OPEC) reportedly increased output in February, but overall oil production is seen as being stored in overseas warehouses rather than being marketed.

Statistics:

  • No. 2 heating oil futures for March delivery increased by 0.60* on the day to 50.28*/gallon.
  • Spot markets at New York Harbor experienced a 2*/gallon price drop, with prompt prices falling to their lowest level since Friday.
  • Wholesale distillate prices saw a modest increase, with No. 2 rising an average of 0.20* to 51.30*/gallon and low-sulfur diesel increasing 0.32* to 53.37*/gallon.
  • April West Texas Intermediate crude oil futures ended the day down 9* at $14.48/bbl.
  • Natural gas prices for March delivery to interstate pipelines averaged $2.20/MMBtu, up 2* from February and 36* higher than a year earlier.

Sources:

  • The Oil Daily
  • Computer Petroleum Corp.
  • Organization of Petroleum Exporting Countries (OPEC)
  • Natural Gas Clearinghouse