Heating oil rebounds after slump

19/03/2009

Wholesale heating oil prices have rebounded in part from substantial losses witnessed yesterday (March 18th) during early trading this morning.

Following the announcement from the Energy Information Administration that US crude, gas and distillate stockpiles rose last week, the April heating oil delivery contract on the New York Mercantile Exchange dropped to $1.264 (88p) a gallon, down 10.7 cents on its opening price.

However, during electronic trading on the bourse this morning, heating oil futures had gained 6.97 cents on the gallon by 6:59 Eastern Time.

The gains came as crude peered above the $50-a-barrel mark for the first time since January.

Carsten Fritsch, a commodity analyst at Commerzbank, told Bloomberg that the rally had been fuelled by the announcement that the US Federal Reserve may spend $1 trillion on buying back debts in US Treasuries, mortgage-backed bonds and other debt instruments.

"The action of the Fed yesterday put the US dollar under strong pressure and revived hopes of a quick turnaround in oil demand ... the bottoming out period can be considered over," he posited.