Crude Price Plunges on OPEC Demand Forecast; Heating Oil Rises on Cold Weather

The price for a barrel of crude fell to a near-four-week low point following OPEC’s revision of its 2009 demand estimate this morning to show larger declines than previously expected.  The OPEC announcement served as the latest reminder that a global recession is in full swing and demand for crude is dropping sharply, especially in China and the U.S., the world’s largest consumers.  The storage facility for NYMEX crude at Cushing, Oaklahoma is full to near capacity, underscoring paltry demand and major oversupply in the U.S., according to Bloomberg.com.  The price for a barrel of crude dropped 5% to settle at $35.40 at market’s close.

Heating oil, on the other hand, ended the day 1.3% above its opening price following a day of long gains and short losses.  The price of heating oil rose despite yesterday’s report of extremely high inventory levels, presumably in anticipation of extremely cold weather predicted in the Northeast and Midwest regions for tomorrow and Saturday.  The Russia/Ukraine gas dispute continues and natural gas supplies to Europe are still disrupted.  Hundreds of thousands  of affected gas customers in Europe could switch to heating oil, which would contribute to higher heating oil prices as well.

HEAT USA price experts reported wild swings in heating oil prices today: after starting about even this morning, the market price shot upward around 10:30 am, resulting in a three-cent increase in retail prices that went into effect at 11:00 am.  The market price then dropped sharply before recovering to end the day slightly above its opening price.

HEAT USA Price Report
Evening projection (for Friday’s average retail price per gallon): UP $0.02 (from Thursday’s opening price)