Heating oil resilient despite demand weakness

27/08/2009

Heating oil prices were marginally lower during electronic trading this morning (August 27th) but were proving resilient to data from the Energy Information Administration (EIA) showing weak demand for the fuel in the US.

At 05:59 Eastern Time, the September delivery heating oil contract was trading at $1.8392 (£1.134) a gallon, down one-eighth of a cent against yesterday's settle price.

The relative stability came despite yesterday's report from the EIA showing that heating oil inventories rose 800,000 barrels last week, extinguishing analysts' hopes for a sustained demand recovery.

Speaking to Bloomberg, Edward Meir, an analyst with MF Global in Connecticut, said: It was an unexpected build ... and obviously enough to send crude prices lower. We could even see further weakness in energy before the current selling runs its course."

However, the effect on prices was partially offset by stronger macroeconomic data which helped to bolster confidence in the US.

Figures showed a strengthening in orders for American durable goods, while home sales were also showing signs of improvement.