Heating oil lower on demand concerns

16 September 2010

Written by Kim Bardsley

Wholesale heating oil prices were lower on the New York Mercantile Exchange this morning (September 16th) as traders expressed concern about demand conditions in the US, the world's largest energy consumer.

The Energy Information Administration yesterday reported a 2.6 per cent drop in demand for gasoline last week, taking inventories to their lowest level since the week ended March 12th.

Speaking to Bloomberg, Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, commented: "We're not seeing as much consumption as we thought. There is an oversupply of oil."

Both heating oil and crude were also under pressure after US downstream firm Enbridge announced that it would be bringing its largest Canadian pipeline back on stream tomorrow, easing concerns about undersupply.

As such, heating oil had fallen more than 1.3 cents by 03:00 Central Standard Time to trade under $2.12 a gallon, while heating oil futures were moving lower towards $75 a barrel.

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