Thermometer

Lower Heating Oil Prices This Winter

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Good news for all of us that heat our homes with oil. Heating oil prices will be lower this winter says the Energy Information Administration. EIA expects residential heating oil prices to average 5% lower this winter than last. That translates into a savings of better than $100 for the typical home in the Northeast where the majority of heating oil is consumed.   

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Industrial Oil Rig

Japan... The Fallout of a Triple Disaster

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The enormity of the disaster in Japan is still being understood. In reality, it has actually been a triple disaster …the earthquake, followed by the tsunami, and now the nuclear explosions and radiation leakage. In addition to the loss of life and the devastation of the lives and livelihood of those affected, repercussions are now being felt around the world. The Japanese Prime Minister has likened the situation to the worst crisis his country has dealt with since World War II.

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Events Around the World Are Supporting Oil Prices

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It was a bit of a roller coater ride today for NYMEX futures on petroleum products as the market worked to figure out the impact the devastation in Japan will have on commodity markets. Crude oil closed up only slightly at 101.19 at Cushing Oklahoma. The big gainer on the day was the price of heating oil, closing up a full 3.5 cents to $306.42 on NYMEX.

As the markets sorted out the Japanese impact, it looks like natural gas will be used in Japan to generate the electricity needed to replace the damaged nuclear facilities. About 70% of Japan’s petroleum products are imported and the current expectations are that demand for oil will less from Japan due to the impact that the earthquakes and the tsunami have had on the country.

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Shadow Oil Rig

Heating Oil Prices Soar on Libyan Unrest

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Wholesale heating oil prices increased almost 15 cents per gallon since last week, before reversing 5 cents per gallon at the close of markets today. This whipsaw effect is fairly common in a market that his been driven into a frenzy based upon fear and speculation, as opposed to the fundamentals and the basics of supply and demand. The ongoing events in Libya have markets on edge and certainly supply disruptions out of Libya are real. As of this morning Morgan Stanly was reporting that all ports and terminals were reportedly closed, cutting off Libya’s exports of 1.3 million barrels a day. However, according to Morgan Stanley, “Saudi Arabia has said the Kingdom will be able to make up lost exports using its spare capacity. Saudi estimates that it will take a month to replace the 1.3 million barrels daily that would be lost.” Gasoline also retreated about 2 cents per gallon today.

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Pen w Chart

Oil Price Increases Could Trigger Another Recession

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Morgan Stanley is now projecting that if crude oil prices reach $120 a barrel (currently under $100/barrel) that world economies are at risk of slipping back into recession. Current fears around rising oil prices have been triggered by ongoing geopolitical events in northern Africa and the Mid-East and concerns that the civil unrest will cause disruption to oil supplies. Crude oil prices last reached the $120/barrel level in 2008 and peaked in fall of 2008 at record levels of $145/barrel.

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Silver Oil Tanks

No Oil Supply Disruption Due to Egypt Situation... For Now

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Morgan Stanley Smith Barney reported this morning that, “OPEC is making efforts to reassure oil markets. OPEC Sec. General El-Badri said that OPEC would increase production should there be any supply disruptions caused by the situation in Egypt”. What happens in Egypt remains uncertain and crowds are swelling in central Cairo, so industry watchers have both eyes on this trouble spot. In addition, political unrest is spreading to other countries in the region. “…the situation continues to ramify throughout the region.

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Oil Rig Sunset

Unrest in Egypt Sends Oil Prices Higher on Monday

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Crude oil and refined fuel prices increased today on fears that the civil protests in Egypt could disrupt the flow of oil. NYMEX crude oil was up over 3%, closing at the highest level since October 2008. Wholesale heating oil prices increased almost 6 cents per gallon, as well. Heating oil prices are further compounded by the approaching snow and ice storm for the Northeast which will extend the strong demand for heating oil and likely make fuel deliveries difficult the next several days.

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Blue Global Map

BP Releases Energy Outlook 2030

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BP released for the first time their analysis which has until now been a comprehensive internal research and planning tool and is based upon 60 years of historical data. According to the report we can look forward to a period of great change as the global economy responds to our desire for energy sustainability, the impact of global warming and changes in energy technology. Energy Outlook 2030 points out that oil will grow relatively slowly over the next 2 decades as other energy sources take on increased importance. In the U.S. changes in the fuels we use, such as home heating oil, gasoline, and diesel fuel, are likely to be significant. Read More »
Shadow Oil Rig

Increases in Private Sector Jobs

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Good employment news! The U.S. added 93,000 private sector jobs in November, the largest 1 month gain in 3 years and also the 10th straight month of gains. Hope we keep it up. In those same 10 months, crude oil has also increases from $74 to $84 a barrel. Is there a correlation?

Also, distillate inventories increased 200,000 barrels this week against an expected draw of 1.1 million and the market responds with all distillates up in the $.04-$.05 range.

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Industrial Oil Rig

Rising Refinery Utilization Rates Signal Rising Heating Oil Prices

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The most recent refinery utilization rates provide insight as to why gasoline and heating oil prices have been on the rise on the East Coast. The most recent East Coast refinery utilization stood at only 68.4% compared to the Gulf Coast refineries at 85%. Morgan Stanly Smith Barney has reported that some press coverage is suggesting that the recent price hikes have been centered around the NY Harbor and that once East Coast refineries return to more normal production levels could soften some of the recent increases. Could moderating heating oil and gasoline prices be far behind?

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Snowy Trees

Looking Back at the 2010 Heating Season

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As we turn the page on another year we continue to see signs of our US economy clawing its way out of the recession that started in 2008. Yesterday, the Energy Information Administration reported that U.S. oil usage for October increased to the highest level since 2008 and gasoline demand saw its highest level since October 2007. The increase in oil and gasoline demand are both signs of a rebounding economy.

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Blue Snowy House

Funding Down for LIHEAP in Massachusetts

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The Low-Income Energy Assistance Program (LIHEAP) in Massachusetts is expected to provide only about 90% of heating assistance to low income households as it did last year, according to state officials. LIHEAP, an annual federal program that assists low income households with assistance in paying for home heating oil, propane, and other fuels, is expected to provide about $1,100 per qualified household this year, compared to $1,240 last year, according to the Lowell Sun.

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Blue Chart w Pen

Bloomberg Reports Robust Demand for Heating Oil

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Bloomberg reported “Demand for oil is turning out to be more robust than originally anticipated,” said Christopher Bellew, a senior broker with Bache Commodities Ltd. in London “The latest U.S. economic data came in better than expected. But there remains the risk that a short-term spike in prices will damage growth.” Gasoline and heating oil prices have seen considerable increases in spite of relatively robust inventories which are being quickly absorbed by the growing economy. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 1.15 million barrels in the last week “The market is still see-sawing,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc.

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