The Northeast is digging out from a historic snowstorm. Interior New England bore the brunt of the snow, with Scranton, PA, Albany, NY and Burlington, VT all receiving 15-25+ inches of snow. Spring breakers who chose a ski resort like Smuggler’s Notch over Panama City Beach are certainly happy with their decision. They will be enjoying some fresh snow on the mountain while their friends shiver on the beach with temperatures forecasted to dip into the 30s tomorrow! More snow is on the way for northern New England starting early Saturday morning. Check out the forecast map below:
Heating Oil
Heating oil declined over the past few days, in spite of these snowstorms. The chart below shows the April heating oil contract since February 21st.
A rise in the demand of heating oil can occur during major East Coast snowstorms. This arises from the fact that 88% of U.S residential heating oil is consumed in New England (Source: EIA, 2014). People are stuck at home during cold snowy days, increasing heating needs. However, a monthly report that OPEC released yesterday revealed Saudi Arabia oil production rose back above 10 million barrels/day for February 2017. Heating oil has been falling over past few weeks. Market confidence is waning in the agreement between major producers to lower output.
Heating Oil Spreads
Heating oil spreads, like heating oil-crude and gasoline-heating oil can also be impacted by storms. Heating oil is used in planes, with 7500 canceled flights (earlier this week) leading to lower demand. Similar consequences occur with gasoline, as significantly less cars travel on the road. However, impacts are not always reflected in the prices, with gas-heating oil spread decreasing despite a warm overall winter this year. It is possible that further colder weather will cause heating oil to out perform gasoline in the coming weeks. These energy spreads are another interesting way weather may impact commodity prices.
