Gasoline Down, Heating Oil Up, Crude Oils Mixed

Crude oil continues to trade in the red down by 3 cents in the Asian session on Thursday morning. Crude remains under the $94 price level at 93.86. Brent oil continues to buck the energy trend adding 14 cents to trade at 106.97 with the spread now wider than $13. Oil closed higher on Wednesday rebounding from the previous session’s loss in reaction to disruptions in exports from Libya. Libyan exports remain disrupted by strikes and protests, and the head of Italian oil company Eni said the situation was getting worse. A Libyan oil official told AFP last week that production outages related to political protests had reduced output to 250,000 barrels a day, from 1.5 million barrels a day before the protests erupted in July.

OPEC members have indicated that they would hold current production levels, which is supporting Brent oil prices, while US inventory is expected to rise by 1 million barrels this week. The EIA official inventory has been delayed by one day due to the Veterans Day holiday.

The US Energy Administration said today that it is predicting gasoline prices to decline further in 2014 according to the Short Term Energy and Winters Fuel Outlook released today. The report stated “The weekly U.S. average regular gasoline retail price has fallen by more than 40 cents per gallon since the beginning of September. EIA’s forecast for the regular gasoline retail price averages $3.24 per gallon in the fourth quarter of 2013, $0.10 per gallon less than forecast in last month’s STEO. The annual average regular gasoline retail price, which was $3.63 per gallon in 2012, is expected to average $3.50 per gallon in 2013 and $3.39 per gallon in 2014.”

As the winter approached analysts are reporting that heating oil sales are showing an impressive increase this year as many consumers who experimented with alternative types of fuel last winter are returning to their tried and tested form of heating. Market sources say that up to last Friday, trading company sales were up on last season at a rate that ranged from 20 to 80 percent. Heating oil is trading at 2.8996 up by 67 points this morning.

 Brent and crude oil is mixed in Asian trade today as investors focused on the upcoming Senate grilling of prospective Federal Reserve chair Janet Yellen for clues on when the central bank will wind down its easy-money policy, analysts said.

The energy market has been closely following the Fed’s debate on when to scale back its $85-billion-a-month stimulus. The onset of tapering will boost the greenback, making dollar-priced oil more expensive for countries using other currencies. In remarks prepared for a Senate confirmation hearing today, current US Fed vice-chair Yellen signaled her support for continuing its monetary stimulus programme until the US economy grows more robustly. “A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” she said. “I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”