Oil Prices Fall as China Cuts Lending

As of 8:57 am EST, the price of crude had dropped by 1.4 percent to reach $74.24 a barrel and the price of heating oil had fallen by 1.1 percent.

HEAT USA Price Report

Today’s average retail heating oil price per gallon: Up $0.02
Morning projection (for Wednesday’s average price per gallon): Down $0.03

China’s lending restrictions were announced last week but only implemented today, causing oil prices to fall. With supplies more than capable of meeting demand, oil price are unlikely to rise in a sustained fashion without robust economic growth in China or the US, neither of which is likely in the near term. China has restricted lending to head off inflation and avoid financial bubbles in assets like real estate, which will slow its economic growth. This week’s inventory reports are expected to show another increase in supplies of crude oil, and that expectation is further weighing on oil prices. Analysts expect a decline in supplies of distillates, which includes heating oil and diesel, but that has not lifted the price of heating oil.

HEAT USA price experts report that nearly all indicators suggest lower oil prices today, and possibly through the week. Distillate inventories may fall, but so may refining rates, which could lead to a repeat of last week when heating oil prices declined despite falling distillate inventories.