Analysis: heating oil to suffer autumn slump

25/08/2009

The wholesale cost of heating oil and other middle distillates may fall in upcoming trading sessions as the demand for fuels lull ahead of winter buying activity, market analysis has shown.

According to Reuters data, trading in heating oil and other distillates may fall later this week as demand dips between the summer driving season - when gasoline prices climb - and the winter season - when heating oil sales rise.

However, the news provider added: "Traders said both upside and downside moves in spot differentials on physical middle distillates were limited because of high inventory levels, run cuts and limited arbitrage opportunities."

Arbitrage refers to the process of taking advantage of differences in prices for products between individual markets, such as that occurs where there are discrepancies in demand for products such as heating oil during summer and winter seasons.

Reuters reported that traders in Europe deem the import window from the US, Asia and the Middle East to be closed for both gas oil and diesel.