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Heating Oil Climbs Despite Large Build in Crude

David Becker
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Heating Oil Climbs Despite Large Build in Crude

Heating oil prices moved higher on Thursday as traders were insightful enough to predict snow in many parts of the US in mid-April. This comes despite a larger than expected build in crude supplies released by both the Energy Information Administration and the American Petroleum Institute.

The American Petroleum Institute late Tuesday reported a jump of 7.6 million barrels in crude oil futures for the week ended April 11. That was more than three times more than expected as analysts surveyed had forecast a climb of 2.4 million barrels. The API reported gasoline stockpiles fell nearly 500,000 barrels, while distillate supplies declined by 1.1 million barrels. Analysts were looking for gasoline stockpiles to fall 1.7 million barrels and distillate supplies to decline by 200,000 barrels

On Wednesday the Department of Energy reported that U.S. commercial crude oil inventories increased by 10.0 million barrels from the previous week. Gasoline inventories decreased by 0.2 million barrels last week, and are near the lower limit of the average range. Distillate fuel inventories, which include heating oil decreased by 1.3 million barrels last week and are below the lower limit of the average range for this time of year.

On the demand side of the equation, gasoline use averaged over 8.8 million barrels per day, up by 4.6% from the same period last year. Distillate fuel demand averaged over 3.8 million barrels per day over the last four weeks, down by 1.4% from the same period last year. Jet fuel demand is up 7.4% compared to the same four-week period last year.

Heating oil prices climbed and is poised to test resistance near a downward sloping trend line at 3.05. Support is seen near the 10-day moving average at 2.943. Momentum is positive as the MACD (moving average convergence divergence) index generates a buy signal. The trajectory of the MACD is positive which points to higher prices. The RSI is moving higher with price action reflecting increasing positive momentum while printing near 62, which is the upper end of the neutral range.

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