Heating Oil, Gasoline Gain as Fed Commits to Low Interest Rates
January 27, 2012, 9:35 AM ESTBy Barbara Powell
Jan. 26 (Bloomberg) -- Heating oil and gasoline gained as the Federal Reserve indicated it will maintain near-zero interest rates to stimulate growth and refiners reduced output to cut supplies.
Futures rose after Fed officials said yesterday that the benchmark interest rate would stay low until at least 2014. Two refineries in Pennsylvania and one in the U.S. Virgin Islands have been closed.
“The underlying reason products are up continues to be the worries of supplies going forward,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “And there’s the idea that oil prices are going to be supported by easy money.”
February-delivery heating oil rose 3.01 cents, or 1 percent, to $3.0493 a gallon at 1:39 p.m. on the New York Mercantile Exchange. Gasoline for February delivery rose 1.12 cents, or 0.5 percent, to $2.845.
Fed Reserve Chairman Ben S. Bernanke said yesterday that policy makers may buy more bonds to boost growth, setting the stage for a third round of quantitative easing.
“There’s concerns about refinery outages and the Fed action is still the predominant reason the market is up,” said Phil Flynn, vice president of research at PFGBest in Chicago.
New York Harbor is the futures delivery point for reformulated gasoline blendstock, or RBOB, and heating oil. The region is facing potential supply tightness after the shutdown of Pennsylvania refineries by Sunoco Inc. and ConocoPhillips.
Hovensa LLC, a partnership of Hess Corp. and Petroleos de Venezuela SA, said on Jan. 18 it will shut the 350,000-barrel-a- day St. Croix refinery in the U.S. Virgin Islands by mid- February. The plant supplies products to the U.S. East Coast.
The Energy Department reported yesterday that U.S. refineries operated at 82.2 percent of capacity last week, an eight-month low.
Regular gasoline at the pump, averaged nationwide, was unchanged at $3.379 yesterday, according to AAA data.
--With assistance from Gene Laverty in Calgary, Caroline Salas Gage in New York and Craig Torres in Washington. Editors: Richard Stubbe, Charlotte Porter
To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
