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Heating Oil pulls back as OPEC chief attempts to soothe supply worries

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October 17th, 2018

Heating oil futures edged lower Wednesday despite data from the American Petroleum Institute showing an unexpected decline in crude inventories, with analysts attributing support to reassuring words from OPEC’s secretary-general on Saudi Arabia’s willingness and capacity to prevent a crude shortage.

West Texas Intermediate crude for November delivery on the New York Mercantile Exchange CLX8, -1.11%  fell 37 cents, or 0.5%, to $71.55 a barrel, while December Brent crude LCOZ8, -0.85% the global benchmark, declined 20 cents, or 0.2%, to $81.21 a barrel.

Analysts said support was found after Mohammed Barkindo, the secretary-general of the Organization of the Petroleum Exporting Countries said Saudi Arabia had assured the cartel it would work to ensure there would be no shortage in the oil market. Barkindo’s remarks came after he was asked at a conference in New Delhi about the potential impact of the controversy surrounding the disappearance and alleged murder of Saudi journalist Jamal Khashoggi, Reuters reported.

News reports said Barkindo had described the oil market as well-supplied but fragile.

Also, President Donald Trump criticized the global condemnation of Saudi Arabia over the Khashoggi disappearance, comparing it with the controversy surrounding Supreme Court Justice Brett Kavanaugh’s Senate confirmation.

“Here we go again with, you know, you’re guilty until proven innocent,” Trump said.

Some U.S. lawmakers have called for sanctions against Saudi Arabia if its rulers are found complicit.

Oil had climbed in electronic trade after sources said the American Petroleum Institute reported late Tuesday that U.S. crude supplies fell by 2.1 million barrels in the week ended Oct. 12. The data also showed an unexpected drop in gasoline stocks of 3.4 million barrels, while distillates declined 246,000 barrels.

The Energy Information Administration will release official data Wednesday. Analysts polled by S&P Global Platts forecast a climb of 1.88 million barrels in crude supplies, while gasoline is seen falling 1.52 million barrels and distillates are expected to drop 1.5 million barrels.

Analysts, however, warned that the data will be distorted by Hurricane Michael. The storm last week shut down roughly 40% of U.S. oil production in the Gulf of Mexico for three days, resulting in around 2 million fewer barrels of crude being produced, noted analysts at Commerzbank, in a Wednesday note.

In other energy trade, November gasoline RBX8, -0.46%  rose 0.2% to $1.9815 a gallon, while November heating oil HOX8, -0.51%  shed 0.2% to $2.3366 a gallon. November natural gas futures NGX18, +1.79%  were up 0.5% to $3.257 per million British thermal units.

 - MarketWatch.

See Also: Crude Oil, Natural Gas, Heating Oil, Unleaded Gas, Ethanol, Gasoline Blendstock