Heating oil down in weak Asian trade

19 May 2010

Written by Kim Bardsley

Heating oil prices moved lower on the New York Mercantile Exchange this morning as anxiety grew during the Asian trading session.

Europe was once more dictating market movements and stocks, shares and commodities were all sent tumbling this morning by Germany's ban on short sales of euro-denominated bonds and bond derivatives.

In a bid to curb speculation in further eurozone instability, Germany also announced a ban on short sales of shares in the country's ten largest financial institutions.

A short sale is a bet that the price of an asset will fall in a given period of time. They are intended to provide a mechanism to rein in overpriced stocks and bonds but since the onset of the financial crisis there has been concern that excessive short selling has added to global economic instability.

Speaking to Bloomberg, Mike Sander, an investment adviser a Sander Capital Advisors in Seattle, said that while conditions remain precipitous in Europe, there is little likelihood of a rise in crude prices.

This morning, heating oil was approaching $1.95 (£1.59) a gallon, having slumped below $2 earlier in the week.