Heating oil weakens on demand, dollar

9 March 2010

Heating oil prices retreated during the Asian trading session this morning (March 9th), with demand and a stronger dollar weighing on the downside.

During electronic trading on the New York Mercantile Exchange, headline heating oil contract slipped below $2.10 (€1.54) a gallon, while crude prices also retreated from an eight-week high of $82.41 a barrel.

Both commodities were hurt by a rallying dollar, which made dollar-priced assets such as crude less attractive to foreign investors.

Such gains are likely to continue throughout the European trading session unless early losses in the pound and the euro are reversed.

Speaking to Bloomberg, Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo, said that demand conditions remain weak in the US, making price rallies difficult to sustain.

"The market is in oversupply for crude and products. It will take more time to see market recovery," he said, speaking ahead of the latest weekly demand reports due out today and tomorrow.

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