Frigid Europe Boosts Heating Oil Bets and U.S. Exports

February 14, 2012 James Heinsman Economic Barometer

Hedge funds have taken a keen interest in heating oil, boosting bets to an 11-week high. The blizzards, freezing weather and strong winds sweeping Europe have increased demand for U.S. fuel.

According to a report by the Commodity Futures Trading Commission, the first week of February saw wagers on increased prices grow 21%, reaching their highest level since November.

The frigid weather throughout Europe has shut down airports, schools and shipping while killing hundreds of people across the continent. The Energy Department revealed that U.S. fuel, heating oil and diesel exports have risen 19% since last year, reaching an all-time high at the end of December.

“With the cold weather in Europe, you’ve seen a lot more product exports from the U.S.,” explained Bill O’Grady of Confluence Investment Management. “If I’m holding inventory and prices are this high, and someone in Romania wants to buy it, I’m going to sell it to them. Money managers are trying to profit off that demand.”

Lipow Oil Associates confirmed the reports, stating that “the cold weather in Europe has created the demand while at the same time Petroplus has shut three refineries. The bottom line is we’re exporting a lot.”

Bets, Bill O'Grady, Commodity Futures Trading Commission, Europe Weather, Fuel Bets,

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