Heating oil up despite bubble fears

16/06/2009

Heating oil contracts moved upward in New York this morning (June 16th), rebuilding on losses witnessed yesterday as equity markets slumped and the dollar strengthened.

With the greenback moving downwards on currency markets once more, New York Mercantile Exchange heating oil contracts were trading at $1.8350 (£1.12) by 04:57 Eastern Time, up 1.9 cents on yesterday's settle price.

Despite the gains, which were also seen in crude futures, analysts are warning that data discrediting the invigorated economic optimism seen in recent weeks could lead to a sharp correction in commodities prices.

Speaking to the Associated Press, Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore, said: "I wouldn't be surprised if oil goes back to the low $60 level. The rally hasn't been driven by fundamentals, which are still pretty weak."

Traders are now said to be looking ahead to the publication of weekly US demand data which will show what the appetite for crude, heating oil, petrol and diesel is like in the world's largest petroleum consumer nation.