Heating oil down in morning trade

15/06/2009

Wholesale heating oil contracts on the New York Mercantile Exchange (Nymex) fell during electronic trading this morning (June 15th), with traders drawn away from dollar-based commodities as the greenback rallies.

By 05:36 Eastern Time, the July delivery heating oil contract was trading at $1.8202 (£1.11) a gallon, down 1.7 cents on Friday's closing price.

Meanwhile, the dollar rose steadily on currency markets, making commodities less attractive to foreign investors involved in electronic trading prior to the bourse's opening later today.

Crude futures also slumped, with traders said to be selling off futures to capitalise on the strong gains seen by both oil and distillates such as heating oil and gasoline last week.

"Speculative money has increased oil's sensitivity to dollar movements and if the dollar continues to strengthen this will weigh on prices," said Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich, speaking to Bloomberg.

He added that prices are expected to continue to move downwards in the coming days as energy commodities move back in line with fundamentals.