Oil Down on High Supply, Heating Oil Rallies

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Oil Down on High Supply, Heating Oil Rallies

Crude oil futures dropped on Monday as investors were worried about a strong dollar and oversupply, but heating oil rose around 6% the second straight day because of operational problems in large US refineries.

Crude oil dropped last week as the weekly decline in US rigs drilling for oil slowed, increasing worries that inventories, already at record highs, would swell further.

Market Watch reported that April delivery crude dropped 2.9% or $1.48 to $49.33 per barrel on the New York Mercantile Exchange. April Brent crude dropped 88 cents or 1.5% to $59.34 per barrel on the ICE Futures exchange of London.

Nymex crude dropped 4.6% last week, dropping more than Brent, which dropped 2.1%.

Heating oil futures rose to above $2.24 per gallon, the highest in almost three months, as some of the largest US East Coast refineries struggled to restore operations after harsh cold weather triggered outages. Sub-zero temperatures were expected to sweep through the region late Monday, raising concerns on adequate heating supplies.

Gene McGillian, senior analyst at Tradition Energy was quoted by Reuters as having said, “It’s a worry of high supplies with crude and tight supplies with heating oil.”

John Kilduff, partner at New York energy hedge fund Again Capital said, “There is the notion that a bottom has been set at $55 for Brent and $45 for WTI, and there are enough buyers out there each time the market tests those levels.”

March gasoline was up a half cent at $1.645 per gallon after a 1.5% rose on Friday. March natural gas traded $2.914 per million British thermal units down 1.3% or 3.7 cents after a 4.1% gain on Friday.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com