heating oil options

heating oil gains

August 3rd, 2012

Heating oil futures and gasoline gained as U.S. payrolls rose more than estimated in July and a sagging dollar boosted the investment appeal of commodities.

Gasoline futures rose after payrolls climbed 163,000, more than the 100,000 median estimate of 89 analysts in a survey by Bloomberg. The dollar fell against the euro after members of German Chancellor Angela Merkel’s coalition signaled they won’t oppose European Central Bank President Mario Draghi’s plan to buy government bonds to ease the region’s debt crisis.

“It’s a combination of a better-than-expected employment number and the statement from the ECB yesterday putting a nice bid in the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline futures for September delivery advanced 6.14 cents, or 2.1 percent, to settle at $2.931 a gallon on the New York Mercantile Exchange. Prices rose 1.5 percent this week.

In another report today showing improvements in the economy, the Institute for Supply Management’s index of U.S. non-manufacturing businesses, covering about 90 percent of the economy, rose to 52.6 in July from the prior month’s 52.1. The median forecast of 73 economists surveyed by Bloomberg projected no change from June. Readings above 50 signal expansion.

The dollar fell 1.6 percent against the euro at 3:27 p.m. in New York.

Heating oil futures also gained on the potential for Tropical Storm Ernesto to become a Category 1 hurricane and disrupt oil refining and production along the U.S. Gulf Coast.

Heating Oil Futures: Ernesto Gains

Ernesto had top winds of 50 miles (80 kilometers) per hour, up from 45 mph earlier, the National Hurricane Center said in an advisory at 11 a.m. New York time. The storm was 410 miles southeast of San Juan, Puerto Rico, and moving west at 21 mph.

The Gulf region is home to 29 percent of oil production and 40 percent of refining capacity, along with 6.5 percent of U.S. natural gas output, according to the Energy Department. The availability of gasoline supplies has already been threatened by the shutdown of an Enbridge Inc. (ENB) oil pipeline serving Midwest refiners and unplanned production unit shutdowns from the Gulf Coast to New York Harbor.

“There’s tropical disturbances popping up everywhere and Ernesto could get into the Gulf of Mexico,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Add to this refinery issues and the pipeline still shut and there’s not a lot of reasons to be short this market right now.”

Heating oil futures for September delivery advanced 8.38 cents, or 2.9 percent, to settle at $2.9261 a gallon, the largest gain in a month. Futures advanced 1.3 percent this week.

Regular gasoline at the pump, averaged nationwide, rose 3.3 cents to $3.567 a gallon yesterday, AAA data showed. That’s the highest price since June 4. Prices have fallen 9.4 percent from a 2012 high of $3.936 on April 4, according to AAA, the nation’s largest motoring organization.

- Barbara J Powell in Dallas at Bloomberg.