Heating oil up in morning trade

26/11/2008

Heating oil prices have risen during trading this morning (November 26th) as investors brace themselves against the prospect of future supply cuts.

On the New York Mercantile Exchange, wholesale heating oil prices rose as high as $1.735 (£1.16) a gallon, following a rise in the price of crude.

The heating oil price rises come after a statement by Russian energy minister Sergei Shmatko in which it was warned that the country, one of the world's largest oil exporters, may enact supply cuts in an attempt to support prices.

Russia's main oil contract, Ural crude, is now trading at less than $50 a barrel.

There is also growing concern that the Organisation of the Petroleum Exporting Countries, which is responsible for supplying about 40 per cent of the world's oil, will rule on further cuts at a meeting in Cairo on November 29th.

Last month, the cartel decided to limit supply by 1.5 million barrels a day in a hope that this would drive up demand.

Further cuts could well impact on the price of heating oil, in addition to other derivatives such as DERV and red diesel.