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Heating Oil Shows Strength as Cold Weather Returns

David Becker
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Heating oil prices edged higher following the Department of Energy release of their inventory estimate. Crude oil prices continued their climb, as the build reported was smaller than analysts had expected. Hedge fund traders increased their long position in futures contracts according to the latest industry report.

This past week’s estimate of inventories were slightly better than expected as the EIA reported a draw in gasoline and a slight build in crude oil. Crude oil inventories increased by 0.1 million barrels from the previous week, while gasoline inventories decreased by 2.8 million barrels last week. Distillate fuel inventories increased by 0.3 million barrels last week but are well below the lower limit of the average range for this time of year.

Annualized demand dipped last week as milder than expected weather reduced the call in heating fuels. Total product demand over the last four-week period averaged about 18.7 million barrels per day, up by 0.6% from the same period last year. Over the last four weeks, gasoline demand averaged over 8.3 million barrels per day, down by 1.5% from the same period last year. Distillate fuel demand averaged over 3.7 million barrels per day over the last four weeks, down by 0.1% from the same period last year. Jet fuel product supplied is down 1.8% compared to the same four-week period last year.

Hedge fund traders increased their heating oil futures position according to the latest commitment of traders report released for the week ending February 18, 2014. According to the CFTC, managed money increased long position by approximately 4500 contracts while reducing short position by 900 contracts.

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