Heating oil up in morning trade, inventories eyed

20 July 2010

Published by Bob Burton

Heating oil prices were rising on the New York Mercantile Exchange this morning (July 20th), driven by the widespread perception that demand for fuel in the US will pick up as the recent economic turmoil relents.

By 02:44 Central Standard Time, the August-delivery heating oil contract was up nearly a cent at $2.0263 a gallon, while crude prices were approaching $77 a barrel once more after a retreat in afternoon trading in Asia.

While the expected improvement in demand was the main driving force behind the rally, analysts also said stronger economic conditions in China were also supporting energy prices.

Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group in Melbourne, told Bloomberg: "China's upside really is its restocking ability and its underlying economic growth, I can't see too much weakness in that market."

There has been recent concern that China's slowing growth rate would impinge on a nascent global economic recovery.