Heating oil prices weaken on dollar

14 December 2009

Heating oil prices were down during the Asian trading session this morning but were recovering from sharp early losses, with news of a $10 billion (£6.1 billion) aid agreement between Abu Dhabi and Dubai helping to restore confidence in the latter's ability to repay its debts.

On the New York Mercantile Exchange, heating oil tracked crude downwards, flirting with the $1.90-a-gallon mark as European markets opened.

Meanwhile, headline crude oil contracts moved below $70 a barrel, weighed down by a stronger dollar.

Speaking to Bloomberg, Victor Shum, a senior principal at consultants Purvin & Gertz in Singapore, said the next support level will be $65, with a further weakening possible if weak demand fundamentals emerge.

"The reality is that the worst of the financial crisis is behind us, but that doesn't mean we're out of the woods," he reflected.

Tomorrow, traders will be looking closely at inventories data from the American Petroleum Institute to assess demand for crude and associated products such as heating oil.

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