Mainers Struggle with Cold
Republican senator for Maine Olympia Snowe is trying to get traction for a bill that would fully fund federal heat aid for low income families and pensioners this winter. (image: tvtechnology.com)
A bill that aims to fully fund the federal heat aid scheme to help vulnerable families this winter has stalled amid bickering in Washington, seacoastline.com reports.
Just before Christmas the government announced the Low Income Home Energy Assistance Program (LIHEAP) would be slashed from nearly $5 billion to $3.5 billion in its drive to reduce the spiralling federal deficit. A record 8.9 million households received LIHEAP heating assistance last year – up 54 percent from 2008 – and the number of recipients is tipped to rise this fiscal year as oil costs soar and the recession bites.
Three New England senators took a bill to Congress last month trying to stave off the LIHEAP cuts to protect vulnerable low-income families and pensioners who will otherwise have to choose between food and staying warm.
State agencies that distribute the money to needy recipients are already being forced to tighten criteria and reduce payouts, and firsthand stories of people struggling with rising winter heating bills are now beginning to surface.
Sen. Olympia Snowe, R-Maine, said Wednesday “the perfect storm” of rising oil prices and falling federal heating assistance was hitting Maine residents hard. The senator was visiting community action corporations throughout Maine to investigate the impact of reduced LIHEAP funding. She labelled the cuts “draconian” and said the remaining money was not enough to help poor Mainers and vulnerable citizens in cold-weather states, particularly in the Northeast, get through winter.
“There really wasn’t much of a tussle between the House and the Senate about [the funding cuts]. That’s a rare exception.”
But the bill to fully fund LIHEAP, which she jointly sponsored with Bernie Sanders of Vermont and Jack Reed of Rhode Island, had stalled in Congress and was getting little traction.
“It’s a tough battle. We had urged the majority leader in the Senate (Sen. Harry Reid) to allow time for debate on our measure, but we haven’t gotten it thus far,” she said. “But we’re not giving up. We’re going to continue to drive it through the next funding process.”
Stories she was hearing from around the state were heartbreaking. She cited the case of a young couple with three young children. The father lost his job and the mother was training to work in the health sector. They had been unable to buy oil, so were warming their home with space heaters.
“Their electric bill is out of sight,” Snowe said. “They’re doing everything right, but they can’t even find part-time jobs in this very difficult economy.”
In Maine, the cost of heating oil was now between $3.70 and $4 a gallon as world oil prices soar on global supply fears because of Iranian threats to close a key oil shipping route. Snowe said heat aid funding was “desperately needed.”
She hoped to build a coalition of senators with similar stories from their constituents in other states to renew traction for the LIHEAP funding bill.
“It gets back to the government’s obligation,” she said.
Lawmakers Campaign to Prevent Savage Heat Aid Cuts
Independent senator Bernie Sanders is part of a coalition of lawmakers that has introduced legislation to force the federal government to maintain winter heating aid funding at last year's levels. (image: vpr.net)
Three New England senators will introduce a new bill to stave off deep cuts to a federal heat aid program as record heating oil price rises loom, businessweek.com reports.
Senators Olympia Snowe of Maine, Bernie Sanders of Vermont and Jack Reed of Rhode Island say the proposed cuts imperil thousands of poor and elderly residents who could freeze to death this winter.
They are campaigning for funding to the Low Income Home Energy Assistance Program (LIHEAP) to be maintained at last year’s levels. Faced with massive budget deficits, the Obama Administration has proposed slashing LIHEAP funding by half to $2.5 billion for the 2012 fiscal year.
“This is absolutely a travesty,” Snowe, a Republican, said of the expected cuts. “This is a program that can really make the difference between life and death.”
According to government statistics, a record 8.9 million households received LIHEAP heating assistance last year – up 54 percent from 2008, aarp.org reports.
For the 2012 fiscal year, 9.4 million households are projected to receive aid. But state agencies that distribute the money to needy recipients are being forced to tighten criteria and reduce payouts amid uncertainty at how much is on offer from the federal scheme.
Sanders said moves to slash assistance during an economic downturn with high unemployment and more Americans “entering the ranks of poverty” were unacceptable.
“We will not accept significant reductions. We don’t want to see people [faced] with the choice to heat their homes for winter or buy food … or prescription drugs.”
New England states in the Northeast are more reliant on heating oil than most other parts of the country. Average residential heating oil prices are tipped to hit record levels this winter, with pensioners and those on low and fixed incomes likely to be worst hit.
“In many cases it comes down to not only whether or not people can be comfortable, but survive,” said Reed.
LIHEAP officials say 17 US states are already reporting huge increases in requests for assistance as the tough economic climate bites.
Heating Oil Price Trend for September 9: -3¢
For the past few weeks, Bernanke has reiterated the Fed is prepared to use its arsenal of tools to bolster the flailing economy, but has been vague about what those tools are and when he intends to use them. (image: thefinancialphysician.com)
Oil prices swung back and forth on Thursday before finally dipping as traders waited to hear President Obama’s jobs speech before planning their next moves. Heating oil prices lost three cents and crude slipped 29 cents to finish at &89.05 a barrel on the NYMEX.
Analysts believe Obama’s new jobs plan could include an economic stimulus package of up to $400 billion over the next year. As the United States remains the world’s largest oil consumer, such an announcement will likely push oil above and beyond the $90 a barrel mark – economic growth and oil consumption typically go hand in hand.
Meanwhile, Federal Reserve Chairman Ben Bernanke disappointed many investors by failing to divulge any details about the central bank’s next move toward boosting the economy. Bernanke said the Fed “will do all it can” to lower unemployment rates and encourage growth, but didn’t say exactly how. Economists expressed concern over the impact further stimulus measures could have on inflation. Bernanke dismissed these fears, saying any rise in prices from inflation this year will probably be transitory and not permanent.
The Energy Information Administration released its weekly supplies report, showing oil inventories dropped four million barrels. Supplies of distillates (heating oil and diesel) posted a build of 700,000 barrels, pretty close to what strategists had expected.
In the Gulf, Tropical Storm Nate threatens to disrupt production. The National Hurricane Center expects the storm to gather strength over the next two days, so rig operators must once again consider evacuating platforms.
The average retail heating oil price in the Northeast is three cents lower than Thursday’s average price.
Heating Oil Price Trend for September 8: +6¢
In a very tight vote on Wednesday, the Second Senate of the Federal Constitutional Court of Germany agreed to participate in further bailout packages for Greece. Since Germany is one of Europe’s biggest economies, the move calmed fears that Greece’s debt crisis could spread to other eurozone members. (image: telegraph.co.uk and Nicholas Whitaker for HeatingOil.com)
Oil prices spiked to their highest level in over a month on Wednesday, riding on climbing equities markets and rumors that President Obama’s jobs plan could include a $300 billion stimulus initiative. Heating oil prices jumped six cents and crude rose $3.32 to settle at $89.34 a barrel on the NYMEX.
With election season looming, Obama’s speech on Thursday is expected to deliver a $300 billion - $400 billion stimulus proposal to boost the flailing economy and his approval ratings. Analysts believe an extension of expiring unemployment benefits and a one-year extension of a payroll tax cut for workers will be included in the plan. The White House is also said to be considering a tax credit for businesses that hire the unemployed.
In other market factors, fears about whether Europe will be able to contain Greece’s debt crisis are keeping pressure on oil prices, but a weak dollar helped push them upwards. Germany’s Federal Constitutional Court agreed to lend further assistance in resolving Greece’s financial struggles, pushing the euro stronger than the dollar.
Workers have returned to platforms and rigs in the Gulf of Mexico after Tropical Storm Lee caused evacuations and disruptions in production over the weekend. However, weather forecasters have warned that yet another storm in the Gulf could be upgraded to a tropical depression within the next couple days.
Prices may swing again this week as traders take cues from oil inventory reports from the Department of Energy and the American Petroleum Institute, which came out late Wednesday after being pushed back for Labor Day.
The average retail heating oil price in the Northeast is six cents higher than Wednesday’s average price.
Heating Oil Price Trend for September 7: +1¢
Thousands of Italians protested in the streets against a new round of austerity measures on Tuesday as European stock markets hit their lowest levels in two years. However, Europe’s top leaders remain adamant that they won’t allow Greece’s debt crisis to spread to other larger nations. (image: telegraph.co.uk and Nicholas Whitaker for HeatingOil.com)
Oil prices barely moved on Tuesday as traders responded to sour economic outlooks for the United States and Europe. Heating oil prices gained a penny and crude climbed just 43 cents to finish at $86.02 a barrel on the New York Mercantile Exchange.
Fears of economic collapse aren’t new oil market influences. However, speculation of a double-dip recession in the U.S. and Europe’s ongoing sovereign debt crisis are stirring new fears the financial turmoil could spread to Asia. Major U.S. stock indexes are still falling from Friday’s report from the Labor Department revealing the country added zero new jobs in August. Stock indexes and oil prices slipped even further on Tuesday as traders became uneasy Greece’s debt crisis could spread to stronger, larger eurozone nations but rebounded when Greek leaders signaled they’d speed up the process of reforming Greece’s economic policies.
Economists are anxiously awaiting President Obama’s Thursday jobs address to Congress, as well as upcoming announcements from Federal Reserve Chairman Ben Bernanke about further stimulus measures.
In other market influences, Libya’s Arabian Gulf Oil Company said they’ll be producing around 200,000 barrels a day as early as October, sooner than officials originally expected. Despite the Libyan rebels’ recent victory in Tripoli over estranged former leader Moammar Gadhafi, it may take quite some time before Libya is back to exporting the 1.3 million barrels of oil that it was before the civil war. And, traders are keeping an eye on oil fields in the North Sea, where maintenance work could cause some delayed deliveries.
The average retail heating oil price in the Northeast is one cent higher than Tuesday’s average price.
Heating Oil Price Trend for September 6: -5¢
The U.S. economy added zero new jobs in August, once again sparking fears the country is headed for a double-dip recession. President Obama will address the issue in a speech on Thursday, possibly unveiling his new job creation recommendations. (image: theusnewsdot.com and Nicholas Whitaker for HeatingOil.com)
Oil prices plunged last Friday on the Labor Department’s disheartening employment report and fears that Tropical Storm Lee could disrupt oil production in the Gulf. Heating oil prices dropped five cents while crude lost $2.48 to finish at $86.45 a barrel on the NYMEX.
Economists had predicted the U.S. had added 80,000 jobs in August, but Friday’s report from the Labor Department showed no change since July – the worst performance in a year. The unemployment rate didn’t change either; it remains at 9.1%. Some traders believe the lackluster report will inspire the Federal Reserve to approve further economic stimulus measures, which officials have said they’re considering. A new stimulus package could bring stability and higher prices to oil markets, if it effectively boosts economic growth. The central bank’s next meeting is scheduled for September 20-21. Oil nearly breached the $90 a barrel mark last week, but analysts believe that until the Fed and the White House establish more direct economic policies, oil prices could dip back down to the low $80s – high $70s range.
Meanwhile, the “tropical wave” the National Hurricane Center said had only a 30% chance of becoming a hurricane may be doing just that. The wave was upgraded to Tropical Storm Lee and is heading towards the Gulf of Mexico. Oil companies have evacuated many of the Gulf’s production facilities and platforms and shut in around 12% of total U.S. output – around 666,321 barrels worth. Rough sea conditions prohibited tanker offloading from the Gulf, but oil is still being delivered to customers from onshore storage facilities.
The average retail heating oil price in the Northeast is five cents lower than Friday’s average price.
Heating Oil Price Trend for September 2: -3¢
Oil rigs in the Gulf of Mexico, where drilling operators are poised to shutdown operations even further to prevent damage or loss from two looming storms. (image: latimesblogs.latimes.com and Nicholas Whitaker for HeatingOil.com)
A strengthening storm in the Gulf of Mexico overwhelmed positive U.S. employment reports, sending oil prices in different directions on Thursday. Heating oil prices lost three cents while crude climbed 12 cents to finish at $88.93 a barrel on the NYMEX.
The National Hurricane Center has been keeping an eye on a “tropical wave” they reported had only a 30% chance of developing into a full-blown hurricane. However, the most recent update shows there’s now an 80% chance the storm will strengthen to hurricane status within the next two days. September is the peak month for hurricane activity.
To prepare for the worst, seven oil companies have already evacuated nine platforms in the Gulf of Mexico, shutting down about 80,000 barrels a day of production. The Gulf is such a hotbed of oil drilling, that figure only accounts for about 5.7% of output from the region. Not too far from the Gulf, Hurricane Katia is also picking up momentum as it moves east along Puerto Rico.
In economic influences, the Labor Department reported new claims for unemployment benefits dropped by 12,000 last week, a potential sign of U.S. recovery. And, the Institute for Supply Management announced its manufacturing purchasing manager’s index showed slightly expanding activity in July. However, Labor officials also recorded a 0.7% decline in worker productivity and an increase in national labor costs. More definitive market action could come on Labor Day when non-farm payroll reports are released – economists expect an increase of 80,000 jobs.
The average retail heating oil price in the Northeast is three cents lower than Thursday’s average price.
Heating Oil Price Trend for September 1: No Change
Stockpiles of crude and heating oil posted strong builds last week, but a drastic dip in gasoline inventories leveled the market. (image: insight.yrcw.com and Nicholas Whitaker for HeatingOil.com)
Oil prices stayed put on Wednesday as the Department of Energy’s weekly stockpile report showed contradicting swings in gasoline and crude supplies. Heating oil price didn’t move while crude slipped a measly nine cents to finish at $88.81 a barrel on the New York Mercantile Exchange.
Analysts had expected oil inventories to build by 200,000 barrels – instead, they rose 5.3 million barrels. Gasoline, however, was expected to fall one million barrels and instead dropped by 2.8 million. Inventory decreases of any kind of petroleum product usually indicate strong demand levels, so the differing figures failed to push markets in either direction. Supplies of distillates, namely heating oil and diesel, climbed 400,000 barrels. The Energy Department also said refineries have slashed operations by 1.1%, slightly more than the 0.6% strategists predicted.
In economic indicators, ADP reported the U.S. added 91,000 jobs in the private sector, falling slightly short of the 100,000 economists had forecast. The news wasn’t enough to move oil markets either, but traders are anxiously awaiting the Bureau of Labor Statistics nonfarm payroll report due out on Friday.
And, with millions of Americans still piecing their lives and homes back together after Hurricane Irene, traders are keeping an eye on two more possibly threatening storms. Tropical Storm Katia is brewing far out in the Atlantic and could become problematic if it strengthens and swings towards the Gulf, a hotbed of oil rigs. The National Hurricane Center also identified a “tropical wave” in the Caribbean Sea they believe has a small chance of becoming a hurricane within the next two days.
The average retail heating oil price in the Northeast is unchanged from Wednesday’s average price.
Heating Oil Price Trend for August 31: +6¢
Federal Reserve Chairman Ben Bernanke’s speech last Friday in Wyoming didn’t inspire much confidence the Fed would issue further stimulus measures to boost the economy, but recent meetings indicate the central bank’s members may be changing their tune. (image: chinavesting.com and Nicholas Whitaker for HeatingOil.com)
Israeli warships closing in around Egypt kept traders wary on Tuesday, but oil prices still jumped to their highest levels in nearly a month on hopes the Federal Reserve will continue its monetary easing efforts. Heating oil prices rose six cents while crude hiked $1.63 to finish at $88.90 on the NYMEX.
At the Fed’s latest meeting, some officials raised the possibility of implementing another round of economic stimulus measures. The news immediately boosted oil markets, since the Fed’s last two similar plans have strengthened commodities across the board and weakened the value of a dollar. A weak dollar boosts oil prices too – it makes dollar-dominated commodities like oil cheaper for traders holding other currencies.
The central bank’s last two stimulus initiatives weren’t very effective in lifting the nation’s economy, and so far no solid plans have been released. Analysts also noted market surveyors shouldn’t read too much into Tuesday’s price hikes, since many traders are still stuck at home dealing with power loss from Hurricane Irene and participation was very light.
Traders are keeping an eye on activity in the Red Sea, where two Israeli warships are reportedly heading toward Egyptian borders. Egypt isn’t an oil powerhouse but it does produce around 600,000 barrels a day, which is mostly used domestically. Israel produces even less. However, the prospect of more violence in the Middle East could mean further disruptions of production.
Meanwhile, a senior official from the rebel National Transitional Council announced that Libya is set to rehabilitate most of its oil wells, so production and exportation should begin recovering to normal levels gradually.
The average retail heating oil price in the Northeast is six cents higher than Tuesday’s average price.
Heating Oil Price Trend for August 30: No Change
U.S. economic updates from July, including a better-than-expected rise in personal incomes, have traders feeling good about recovery efforts. (image: uphaa.com and Nicholas Whitaker for HeatingOil.com)
Oil prices saw moderate gains on Monday as strong stock market action overshadowed Hurricane Irene’s lingering impact. Heating oil prices didn’t move and crude climbed 52 cents to finish at $87.27 per barrel on the NYMEX.
Millions of Americans are still dealing with power loss and flooding in the aftermath of Hurricane Irene, but traders are already looking ahead to the latest U.S. economic indicators and influential news from the Commerce Department. While many suffered property damage and at least 40 people lost their lives, the general consensus remains that the storm could’ve been much worse. Only a small fraction of East Coast oil refineries reported shutdowns or reduced operations from the storm, and all are expected to be fully functional again within the next few days. However, with scientists confirming that continued global warming will likely bring a rise in natural disasters, analysts are reminded the peak month for hurricane activity is September and still lies ahead of us.
U.S. equities and commodities saw boosts in trading on the stock market, pushing oil prices slightly upwards. The Commerce Department reported Americans’ personal incomes climbed a more-than-expected 0.3% in July, with personal spending rising 0.8% in turn. Administrators noted the auto industry showed particularly strong sales reports. The new figures don’t account for back-to-school sales, so economists expect further gains in the near future. The Labor Department’s monthly employment report, due out on Friday, will almost surely affect oil markets as well.
The average retail heating oil price in the Northeast is unchanged from Monday’s average price.
Heating Oil Price Trend for August 29: +3¢
Refinery shutdowns along the East Coast boosted gasoline prices as well as heating oil prices as residents scrambled to stock up and prepare for the storm. (image: miamiherald.com and Nicholas Whitaker for HeatingOil.com)
Oil prices edged slightly higher on Friday as traders considered the near-future outlook for the U.S. economy and Hurricane Irene’s potential impact on refineries and other domestic oil infrastructure. Heating oil prices inched up three cents and crude gained seven cents to finish at $85.37 a barrel on the New York Mercantile Exchange.
Prices jumped last week on optimism that Federal Reserve Chairman Ben Bernanke would announce a new round of economic stimulus measures. However, in a speech on Friday Bernanke said the Fed has no such plans at this time. The announcement caused some confusion since many believe now would be a pertinent time for further bailout planning. Strategists have been torn for some time about whether or not the U.S. economy is slowly recovering or headed for a double-dip recession. Traders follow economic trends of large oil consumers like the U.S., China, and Europe because economic health is tightly tied to oil demand levels, a strong factor in determining pricing.
Fears of damage to oil infrastructure from Hurricane Irene pushed prices up on Friday, and many refineries shut down all operations for the weekend and possibly longer. The main facilities of refineries are huge steel and concrete structures, designed to withstand strong winds and earthquakes – however, pipelines, power lines and cooling towers are more vulnerable. After a full shutdown, refineries typically need several days or even weeks to completely restart operations.
The average retail heating oil price in the Northeast is three cents higher than Friday’s average price.
Heating Oil Price Trend for August 26: +3¢
Hurricane Irene has already wreaked havoc in the Caribbean, killing at least one Puerto Rican woman. Predicted to soon strengthen to a Category 4, it’s the first major hurricane in over seven years to hit the East Coast. (image: msnbc.msn.com and Nicholas Whitaker for HeatingOil.com)
Oil prices climbed on the back of spiking gasoline futures on Thursday as analysts expressed fear Hurricane Irene could throw a wrench into refinery production and supplies along the East Coast. Heating oil prices gained three cents and crude crawled 14 cents higher to finish at $85.30 a barrel on the NYMEX.
A strong dollar pushed oil prices down early in the day, but they gradually rose as strategists focused on updates from the National Hurricane Center detailing the storm’s path from Florida up the coastline. Smaller islands, including the Outer Banks, are being evacuated and New York City is expecting a direct hit late Sunday evening. According to the federal Energy Information Administration, approximately 9% of our country’s operable oil refining capacity lies along the East Coast. That’s around 1.6 million barrels worth, not to mention infrastructure. Damage or loss of power to pipelines, refineries or vessels would be costly, likely pushing prices up across the board.
U.S. refineries have increased operations to a four-year high, boosting trader confidence. However, one Sunoco processing facility in Philadelphia caught fire, taking its 335,000 daily barrels out of play.
In other market influences, traders are awaiting a speech from Federal Reserve Chairman Ben Bernanke due to be delivered in Wyoming on Friday. Hopes he could announce another round of stimulus measures already pushed oil prices upwards once this week.
The average retail heating oil price in the Northeast is three cents higher than Thursday’s average price.
Heating Oil Price Trend for August 25: +2¢
Analysts severely underestimated drops in U.S. oil stockpile levels, which often pushes prices up. (image: fotosearch.com and Nicholas Whitaker for HeatingOil.com)
After climbing most of the day on the Department of Energy’s weekly inventory report, oil prices went separate ways on Wednesday as traders cashed in on late-day selloffs. Heating oil prices rose two cents and crude lost 28 cents to finish at $85.16 a barrel on the NYMEX.
The DoE’s stockpile report indicated strong U.S. demand levels, pushing prices up. Analysts had expected oil inventories to rise 1.3 million barrels and instead they dropped by 2.2 million barrels. And, refineries have cranked up operations by 1.2% to 90.3% of capacity. Stockpiles of distillates – heating oil and diesel – posted a 1.7 million barrel build. Economists are puzzled why so many traders bailed within the last half hour of the trading day, but it did help keep heating oil prices down.
Until now, the week’s market influences have focused on fighting around Moammar Gadhafi’s military compound in Tripoli, where rebels now claim to have taken control. However, Gadhafi loyalists continue firing rockets and shelling rebel positions, and the leader himself issued a message saying he’d never surrender, fighting “until victory or martyrdom.” Since Libya’s civil war began in February, Saudi Arabia has had to increase its oil production to make up for Libya’s lost 1.3 million barrels a day.
Strategists are also keeping an eye on Hurricane Irene, which is making its way up the East Coast and expected to hit New York on Sunday evening. Currently, the category 3 hurricane is carrying 115 mph winds. Evacuations have already begun on North Carolina’s Outer Banks and analysts are concerned about oil production disruptions and shutdowns.
The average retail heating oil price in the Northeast is two cents higher than Wednesday’s average price.
Heating Oil Price Trend for August 24: +4¢
A 5.8 magnitude earthquake in Virginia on Tuesday briefly turned oil marketers' attention away from Libya’s civil war, but fears of domestic production disruptions quickly quieted. Here, workers in Washington, DC (and across the East Coast), wait outside evacuated buildings. (image: J.Scott Applewhite/Associated Press and Nicholas Whitaker for HeatingOil.com)
Oil prices posted minor gains on Tuesday as the latest round of violence and turmoil in Libya once again kept markets in check despite strides in equities trading. Heating oil prices hiked four cents while crude climbed $1.02 to finish at $85.44 a barrel on the New York Mercantile Exchange.
U.S. equities and commodities rallied early in the day on optimism that Federal Reserve Chairman Ben Bernanke might announce another round of stimulus initiatives later this week. Then, a Virginia-based 5.8 magnitude earthquake shook New York and most of the East Coast early in the afternoon, causing some concern about production disruptions. However, no injuries have been reported so far and oil markets look to be largely unaffected.
In Libyan developments, heavy fighting continued around Moammar Gadhafi’s main military compound in Tripoli. Surprisingly, Gadhafi’s son and heir Seif al-Islam appeared, guiding a tour of foreign journalists around in an attempt to show them the Libyan people still support Gadhafi’s regime. Because al-Islam was thought to be captured, his arrival sparked excitement among regime supporters. Both Gadhafi and his son have been indicted by the International Criminal Court.
Despite Seif al-Islam’s return, strategists remain tentatively confident a rebel triumph will eventually restore Libya’s oil production and bring more peaceful leadership. Since Libya’s civil war heightened several months ago, OPEC has been forced to find that 1.3 million daily barrels somewhere else – namely, Saudi Arabia.
The average retail heating oil price in the Northeast is four cents higher than Tuesday’s average price.
Heating Oil Price Trend for August 19: -9¢
The Philadelphia Federal Reserve and its President Charles Plosser reported that its factory-sector index of general business activity plummeted to levels not seen since March of 2009. (image: uk.ibtimes.com and Nicholas Whitaker for HeatingOil.com)
Oil prices crumbled on Thursday on a fresh batch of sour U.S. economic data made traders once again fearful the world may be careening towards another recession. Heating oil prices dipped nine cents and crude lost a whopping $5.20 to finish at $82.83 a barrel on the NYMEX.
Oil contracts fell alongside global equities, the euro, and other currencies in another trading day of inconsistent ups and downs that have come to define this month’s market activity. The latest crummy economic report came from the Philadelphia Federal Reserve, which reported manufacturing and other heavy oil-using industries may slow operations in an attempt to protect themselves from the weakening economy.
Strategists believe the 2008 financial crisis, which saw oil prices drop to almost $30 a barrel, is still lingering in many traders’ minds. Such fears aren’t entirely unwarranted, but a drop to those levels again is extremely unlikely given today’s supply and demand balance.
Since talks earlier this week between French President Nicolas Sarkozy and German Chancellor Angela Merkel were largely unproductive, market participants remain hopeful top European leaders will come up with another approach to solving the continent’s sovereign debt crisis. The problem largely began in Greece in April last year when credit rating Standard & Poor’s issued the country a BB+, a junk status, and Greek leaders were forced to request a bailout package from the International Monetary Fund.
The average retail heating oil price in the Northeast is nine cents lower than Thursday’s average price.
Heating Oil Price Trend for August 18: +3¢
Strategists have turned their eye on gasoline, since supply and demand levels for America’s most widely used petroleum product can influence global oil demand and pricing trends. (image: fortbendnow.com and Nicholas Whitaker for HeatingOil.com)
Oil prices posted moderate gains on Wednesday as U.S. gasoline stockpiles dropped more than analysts expected, inspiring trader confidence in U.S. demand levels. Heating oil prices rose three cents and crude advanced 93 cents to finish at $87.58 a barrel on the New York Mercantile Exchange.
Strategists anticipated the Energy Information Administration’s weekly inventory report to show a 2.3 million barrel decline in gasoline supplies; instead it dropped by 3.5 million barrels. The report overwhelmed lackluster supply updates for distillates, namely heating oil and diesel, which were expected to increase by 700,000 barrels but instead spiked by 2.4 million barrels.
The EIA also noted the number of actively drilling oil rigs in the U.S. has been steadily climbing for three years and recently passed the 1,000 mark.
Oil also got a boost from investors looking to get in on the action before September contracts expire. And, traders are monitoring refinery activity in case operators decide to cut down on production instead of working to full capacity. Unusually sluggish U.S. summer fuel demand coupled with slow global manufacturing activity will likely keep oil in check. Without much significant action driving markets, prices are expected to retreat back to the $85 a barrel mark.
The average retail heating oil price in the Northeast is three cents higher than Wednesday’s average price.
Heating Oil Price Trend for August 17: -1¢
German Chancellor Angela Merkel and French President Nicolas Sarkozy announced their intention to form a “new economic government,” lead by European Union President Herman Van Rompuy, that will meet at least twice a year. Oil marketers remain unconvinced the measure will be enough to curb the continent’s spiraling debt problems. (image: g-8.de and Nicholas Whitaker for HeatingOil.com)
Despite unexpectedly strong industrial reports from the U.S., oil prices drooped on Tuesday as traders question how demand will be affected by wavering global economic growth. Heating oil prices lost one cent and crude dropped $1.23 to settle at $86.65 a barrel on the NYMEX.
Contracts spiked slightly yesterday as German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Paris to discuss possible solutions to Europe’s sovereign debt crisis, such as issuing bonds backed jointly by eurozone countries. Many believe replacing 17 government bonds with a single “Eurobond” would allow flailing economies likes Greece, Portugal, and Ireland to borrow in cooperation with stronger economies like Germany and France. However, Merkel and Sarkozy said it’s not the right time to restructure bonds, and oil prices slipped back down today when the two leaders failed to come to any solid conclusions.
Over the past several weeks, traders have consistently taken more cues from global financial markets than the more fundamental indicators of oil pricing like supply and demand levels, though the two factors are linked. Thriving economies mean higher demand levels, and vice versa.
The U.S. delivered a mixed bag of economic news on Tuesday, with new home construction falling 1.5% in July. The price of imported goods rose slightly, and industrial output saw surprising gains. Analysts believed the industrial lift would raise the price of distillates like heating oil and diesel, but the market stayed put.
The average retail heating oil price in the Northeast is one cent lower than Tuesday’s average price.
Heating Oil Price Trend for August 16: +4¢
Oil market influences finally took a step away from U.S. economic flip-flops with the weak dollar overwhelming most other activity. By contrast, the euro gained strength as French President Nicolas Sarkozy and German Chancellor Angela Merkel met to discuss solutions to the eurozone’s sovereign debt problems. (image: truthalliance.net and Nicholas Whitaker for HeatingOil.com)
Oil prices rebounded to their highest level in nearly two weeks on Monday, spurned by a weak dollar and a flurry of stock market improvements. Heating oil prices climbed four cents as crude gained $2.50 to finish at $87.88 a barrel on the NYMEX.
Strong U.S. equities pushed oil upwards as the Dow Jones Industrial Average jumped more than 100 points. Economists believe if the momentum continues, oil prices could soon breach the $90 a barrel mark again. That’s well below the level it was a month ago, but still a sign of strength that should inspire trading. Investors await cues from the American Petroleum Institute inventory report due out on Tuesday. Stockpiles of distillates, primarily diesel and heating oil, are expected to build by 700,000 barrels.
Also, the dollar paled in performance against a panel of six other currencies, giving oil markets a strong midday upgrade. A weak dollar often boosts dollar-denominated commodities like oil.
Traders are slowly placing larger bets after last week’s traumatic credit downgrade, despite negative economic news from U.S. industrial sectors. The Empire State index showed a decline in business conditions and manufacturing activity around the New York region for the third month in a row. And, the National Association of Home Builders/Wells Fargo released their monthly home market index report for August, revealing a serious lack of growth.
Strategists are also keeping an eye on Tropical Storm Gert, the seventh storm of the season. Storm activity has picked up in the Atlantic basin, typical for this time of year, but so far most oil refineries have avoided shutdowns.
The average retail heating oil price in the Northeast is four cents higher than Monday’s average price.
Heating Oil Price Trend for August 15: No Change
U.S. equities and retail sales rose in July, despite recent studies showing American’s have curbed their personal spending. (image: zimbio.com and Nicholas Whitaker for HeatingOil.com)
After a week of rollercoaster trading, oil prices quieted on Friday as traders attempt to weigh contradicting cues from the U.S. economy. Heating oil prices didn’t move while crude dropped a modest 34 cents to finish at $85.38 a barrel on the New York Mercantile Exchange.
U.S. economic reports continue to overwhelm other market factors as traders cautiously await signs to tip the scale between weakness and recovery. The Commerce Department released a Friday report showing a promising rise in nationwide retail sales, good news after last week’s update showing Americans are cutting back on personal spending. However, the optimism didn’t last after Thomson Reuters/University of Michigan announced the early-August consumer sentiment index plummeted to the lowest level it’s been since 1980.
In other oil news, the Energy Information Administration estimates U.S. gasoline demand will drop 2.1% this summer to its lowest level in a decade. It may not seem relevant to heating oil prices, but when the world’s most voracious oil consumer is using less of its most widely used petroleum product, it makes oil investors question the security of making large buy-ins.
With U.S. demand in question, the EIA, OPEC, and the International Energy Agency have all scaled back their global oil demand estimates for 2011. OPEC has promised it won’t adjust production levels to protect prices – not yet, anyway.
The average retail heating oil price in the Northeast is unchanged from Friday’s average price.
Heating Oil Price Trend for August 12: +4¢
Surveyed economists expected new applications for unemployment benefits to hit 410,000 last week but instead they fell to 395,000. (image: teenvogue.com and Nicholas Whitaker for HeatingOil.com)
Oil prices hit their highest point this week on Thursday, along with the surging stock market, on an inspiring employment report from the U.S. Department of Labor. Heating oil prices gained four cents and crude jumped $2.83 to finish at $85.72 a barrel on the NYMEX.
According to labor market officials, jobless claims dropped by 7,000 last week instead of spiking as economists feared. U.S. equities markets finished high, and Cisco Systems delivered a better-than-expected national earnings report. Also, the Dow Jones Industrial Average made substantial gains in later afternoon trading, boosting oil markets. Industrial and manufacturing sectors are typically heavy oil consumers, so their growth or weakness often affects demand.
The International Energy Agency issued a warning on Wednesday that a double-dip recession in the U.S. could squelch demand enough to cause a global oil surplus next year. The economic distress in the U.S. and Europe are well known, but financial news from China shows the economy of the world’s second largest oil consumer may also be slowing down. However, the IEA also warned OPEC against taking pre-emptive measures to slash production to maintain prices and demand, saying a global oil surplus is just one possible scenario and it’s too early to say what to expect in upcoming months.
The average retail heating oil price in the Northeast is four cents higher than Thursday’s average price.
