Bloomberg News

Heating Oil Falls to Four-Month Low as Consumer Confidence Slips

December 07, 2012

Heating oil slid to a four-month low after U.S. consumer confidence dropped to the weakest level in four months and U.S. House Speaker John Boehner said there was no progress in budget talks with the White House.

Futures fell as the Thomson Reuters/University of Michigan preliminary consumer sentiment index sank to 74.5 from 82.7 in November. Boehner said there was “no progress to report” in negotiations between House Republican leaders and the White House on how to avoid the so-called fiscal cliff, $607 billion of automatic tax increases and spending cuts set for January.

“The consumer confidence number took away some of the momentum,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The fiscal cliff has been the dark cloud hanging over the market and the market has been begging for a resolution.”

January-delivery heating oil declined 2.79 cents, or 1 percent, to $2.9153 a gallon on the New York Mercantile Exchange, the lowest settlement since Aug. 2. Prices fell 4.1 percent this week, the largest weekly drop since the seven days ended Nov. 2.

Boehner, a Republican, told reporters in Washington that this has been a “wasted week” in the talks.

Obama, a Democrat, and Republican congressional leaders are at loggerheads in negotiations. Obama has said there won’t be a deal without an increase in taxes on upper-income taxpayers. Republicans want to cut spending on entitlements and other programs while keeping current tax rates in place.

Market Waiting

“The market is waiting to see what, if anything, is negotiated before the end of the year,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Heating oil also fell as the National Weather Service’s Climate Prediction Center said temperatures would be higher than normal on the East Coast from Dec. 12 to Dec. 20.

“There’s really no cold weather on the horizon,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.

Gasoline was little changed after gaining as much as 1.1 percent earlier today on speculation that an improving job market will buoy fuel demand.

November employment climbed by 146,000, higher than the 85,000 jobs projected in a Bloomberg survey. The unemployment rate fell to 7.7 percent, the lowest since December 2008, as the size of the labor force shrank. Today’s price gain breaks the longest streak of declines since Oct. 24.

Fiscal Cliff

“Given how good the headline numbers were, I’m surprised we’re not higher, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. ‘‘The fiscal cliff has the potential to be more of a negative than a positive.”

Gasoline for January delivery rose 0.05 cent to settle at $2.5974 a gallon on the exchange.

Prices dropped 5.9 percent this week, the first decline in five weeks, after the Energy Department reported Dec. 5 that inventories of the motor fuel climbed the most last week since the terrorist attacks on the World Trade Center in New York and demand slipped 0.9 percent.

“We did see a big build in gasoline and demand fell off,” Rigolini said.

The average nationwide cost for regular gasoline fell 0.8 cent to a $3.371 a gallon, AAA said today on its website. That’s the lowest level since July 5. The pump price reached a 2012 high of $3.936 on April 4.

To contact the reporter on this story: David Marino in New York at dmarino4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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