Heating oil tumbles, tracking oil

26/05/2009

Heating oil prices have slumped during electronic trading on the New York Mercantile Exchange this morning (May 26th), following crude downwards.

The falls have been broadly attributed to predictions that the Organisation of the Petroleum Exporting Countries (Opec) will leave production quotas unchanged when it meets later this week.

By 06:14 Eastern Time, the June delivery heating oil contract had fallen to $1.4918 (94p) a gallon, down 4.62 cents.

Speaking to Bloomberg TV, Eliane Tanner, an analyst at Credit Suisse Group, said that there are still persistent concerns about weakness in demand for crude, heating oil and other distillates.

"The fundamental situation is very weak; demand in the US is just collapsing. The market is already pricing in a no-change scenario," he said.

Victor Shum, a senior principal at oil industry consultants Purvin & Gertz, added that Opec's decision not cut quotas is being treated as a bearish move.