Heating Oil Prices Up 11 Cents In Past Three Weeks

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Heating Oil Prices Up 11 Cents In Past Three Weeks By CHRISTOPHER KEATING The Hartford Courant November 30, 2000

Prompted by tight supplies, increasing demand and possibly the unsettled U.S. presidential race, the average price for home heating oil in Connecticut has jumped by 11 cents per gallon since Election Day.

With New England moving into the peak season for heating oil, demand has increased as temperatures have dropped. Supplies are about 20 percent below last year because of cutbacks by the oil-producing nations.

On top of those problems, some experts believe the unsettled presidential election is causing increased volatility in the commodity markets.

"Part of it, I think, is the uneasiness among traders because of this focus on the White House,'' said Donald J. Schmidt, president of the 350-member Independent Connecticut Petroleum Association.

"We've got tremendous instability with this whole presidential race. There's no question that has created some instability. Look at the stock market.''

Schmidt, whose association delivers 91 percent of the state's heating oil, noted that the technology-driven Nasdaq Stock Market has nosedived since Election Day. Traders have also blamed lower-than-expected corporate earnings for the drop in stock prices.

But Steven S. Guveyan, executive director of the Connecticut Petroleum Council in Hartford, dismissed the notion that the election uncertainty has had a major impact on oil prices.

"The drivers in the oil markets are the weather, what OPEC is going to do, inventory levels and refinery outages,'' Guveyan said. "Different people are going to have different opinions.''

The average price for heating oil in Connecticut jumped 5 cents per gallon during the past week to $1.57. That is 9 cents more than mid-November and 24 cents more than Sept. 5, when the state's Office of Policy and Management began taking its weekly survey for the season.

The good news, Schmidt and Guveyan said, is that futures prices have dropped this week. Prices fell 6.5 cents per gallon Tuesday in the spot market at New York harbor, where barges fill up with as much as several million gallons.

Separately, futures prices on the New York Mercantile Exchange for December delivery also dropped 6 cents Tuesday.

"For the Mercantile, that's a big move,'' Guveyan said. "Many times, it's less than a penny. It's sometimes a quarter of a cent.''

But he said he could not predict when those cuts would be reflected in retail prices.

Since home heating oil and diesel fuel are similar commodities, their prices often move in tandem. As a result, the average price for diesel fuel in Connecticut jumped by 4.3 cents per gallon since last week, based on the latest numbers from the American Automobile Association.

Connecticut gasoline prices have remained stable for the past two months, with average prices for self-serve regular unleaded ranging from $1.69 to $1.70 per gallon. The reason, Guveyan said, is that the demand for gasoline is steady at this time of year, while the demand for home heating oil increases sharply.

About two-thirds of the annual sales for heating oil are made during one-third of the year, he said.

http://www.ctnow.com/scripts/editorial.dll?fromspage=CG/articles/business.htm&categoryid=&bfromind=377&eeid=3539197&eetype=article&render=y&ck=&userid=206553684&userpw=.&uh=206553684,2,&ver=2.11

-- Martin Thompson (mthom1927@aol.com), December 01, 2000


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