US: December 24, 2007
NEW YORK - Forecasts for a warm winter may spell relief for households and
businesses in the US Northeast dealing with record high heating oil prices.
Government and private forecasters are predicting a warmer-than-normal
winter in the United States thanks to the La Nina phenomenon, a cooling of
ocean temperatures in the equatorial Pacific Ocean.
If the outlook holds true it would cut into the amount of heating oil
Americans will need this winter as the key winter fuel soars to all-time
peaks near US$3.30 a gallon, tempering the impact of monthly heating bills
and possibly pulling prices lower, dealers said.
"In the long run I think heating oil is going to be coming off," said a
heating oil trader based in New York. "There's plenty of product out there
with a warmer-than-normal overall prediction for the winter."
The Northeast is home to 80 percent of US heating oil demand, making it the
largest heating oil market in the world.
Near-term outlooks by private forecaster Accuweather, also largely calling
for a normal winter, are "not bullish for heating oil in the short-term,"
noted a Houston-based market watcher.
"Looking further out, the forecasts I've seen for Jan-March are for mostly
milder than normal (temperatures) as well. While all these are only
forecasts, we look pretty well set for winter distillate at this point," he
added.
US heating oil supplies are running about 34 percent lower than last year,
though energy experts said this is largely due to a change in the way the
fuel is counted after recent environmental regulation changes.
Heating oil distributors say there is adequate supply to meet demand this
winter, particularly if the winter turns out as warm as forecasters expect.
And they blame the high price on surging costs for crude.
"There were a lot of calls (from households) into the retailers asking why
prices are so high," said Michael Ferrante, President of Massachusetts
Oilheat Council, which represents 250 retailers and wholesalers in the
state.
"People are concerned about their heat bill ... And it goes back to one
reason; the price of crude oil," said Ferrante.
According to government data, the average price US households paid for heat
oil rose last week to a record US$3.29 a gallon, up 35 percent from a year
ago. In New York City, prices topped US$3.50 a gallon this week, up 33
percent year-on-year.
This comes as the price of crude surged late last month to a peak near
US$100 a barrel amid heavy speculation and concerns that global demand is
rising faster than supply.
Oil prices have eased since on worries that a soft economy could slow the
pace of demand growth. (Editing by Christian Wiessner)
Story by Haitham Haddadin
REUTERS NEWS SERVICE
