Warm Weather Forecast As Heating Oil Up
Friday, September 21st 2007, 1:40 pm
News On 6
NEW YORK (AP) _ U.S. government forecasters said Thursday that temperatures in much of the Northeast U.S. _ the world's largest heating oil market _ will be above normal from October to January.
The latest warm-weather projection comes as heating oil futures prices on the New York Mercantile Exchange have set successive record highs, ending Wednesday's trading at $2.2453 a gallon, up 0.30 cent on the day, due to tight inventories ahead of expected strong winter demand.
The Energy Information Administration said Wednesday that distillate stocks (comprising home heating oil and diesel fuel) rose by 1.5 million barrels in the week ended Sept. 14, to 135.5 million barrels. Although stocks are in the upper half of their five-year average range, EIA said, they lag year-ago levels by 7.7 percent.
Demand could be stunted if a forecast by the National Oceanic and Atmospheric Administration proves correct. It said Thursday that most of the U.S. will likely see above-normal temperatures in October through December, though not as high as last winter, which was exceptionally mild.
NOAA's long-term forecast maps show above normal temperatures are expected in upper New England (Maine, Vermont and New Hampshire) in October-December, while in the November-January period, above-normal temperatures extend from Maine through New Jersey, encompassing the entire Northeast.
In the January-March period, the New England region shows equal chances for above-normal, below-normal or normal temperatures.
EIA, in a Sept. 11 monthly forecast, said it expected U.S. heating oil demand to rise this winter from a year ago. Nationwide demand for distillate fuel (diesel fuel and home-heating oil) is expected to gain 2 percent this winter from the October 2006 to March 2007 period.
The EIA projected that residential heating oil prices in the Northeast will jump more than 11 percent to $2.779 a gallon on average, 28.5 cents up on a year ago.
The International Energy Agency, the energy policy watchdog for the major industrialized countries which make up the Organization for Economic Cooperation and Development noted in its Sept. 12 monthly oil market report ``winter temperatures can have a significant impact on demand.''
The warm winter of 2006-2007 trimmed oil demand in the Northern Hemisphere by 900,000 barrels a day, IEA said. Global oil demand in the fourth quarter is expected to rise 2.1 million barrels a day, to 87.8 million barrels a day, IEA projects, followed by an additional uptick of 400,000 barrels a day in the first quarter of 2008.
NOAA also said Thursday the only exceptions to expected above-normal temperatures in the fourth quarter are along the Canadian border from Montana westward and in the Southeast along the South Atlantic coast.
In October, NOAA said it expects weak La Nina conditions to occur. La Nina refers to the unusual cooling of temperatures of the equatorial Pacific Ocean, which has wide-reaching effect.
NOAA said the area along the Canadian border from Montana westward and in the southeast along the south Atlantic Coast, the two areas expected to go against the above-normal temperature trend in the fourth quarter, ``historically experience near- or below-average temperatures associated with La Nina.