April 06, 2020

Heating fuel prices drop as weather warms

NEW YORK — Natural gas fell almost 5 percent and crude oil dropped to more than a two-year low as temperatures rose in the U.S. Northeast and Midwest, increasing expectations that demand for heating fuel will plunge.

Prices in Maine have reflected regional trends, with the average statewide price for home heating oil down to about 91 cents a gallon.

The current average in Maine is 15 cents lower than what it was last year at this time.

“There’s no demand again,” said Anthony Castellano, a natural gas trader at Consolidated Edison Co. in New York, one of the nation’s largest natural gas utilities. “It’s going to be mild. We have plenty in storage.”

The average U.S. temperature is expected to be about 10 degrees higher than normal during the next seven days, with the New York and Chicago gas heating markets, the nation’s largest, 12 degrees and 18 degrees warmer than usual, respectively, according to Weather Derivatives Co. of Belton, Mo.

The warmer weather is expected to reduce average heating demand by 35 percent during the period, the private forecasting firm said.

“Demand is going down the drain. It’s going to be 50 degrees in Minneapolis,” said Hugo Zagaria, a crude-oil trader for Cargill Northeast Petroleum in Minneapolis.

The lower demand comes with natural gas stockpiles 5.1 percent higher during the week ended Dec. 26 than a year earlier, and high-sulphur distillates, consisting mostly of heating oil, 18 percent higher.

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