Heating oil hangs on to crude's coat tails

29/05/2009

Heating oil prices have continued to rise steadily during electronic trading today (May 29th), following a surge in crude prices.

After finishing the day at $1.6014 (99p) a gallon yesterday, the New York Mercantile Exchange's June delivery contract rose a further 1.02 cents to trade at $1.6116 a gallon.

Rises were also seen in near-term crude contracts, which have been supported by a strong performance in equities markets and the announcement that the Organisation of Petroleum Exporting Countries will hold off from making any further supply cuts.

Speaking to Bloomberg, Victor Shum, a senior principal at Purvin & Gertz, said that the demand for commodities has also been supported by a weak dollar, which makes crude, heating oil and other distillates an attractive option for international buyers.

"Oil has followed equities primarily because investors have cash on hand on the sidelines. They are counting on some of the positive economic indicators and are placing bets," he explained.