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By Eliot Caroom
By Eliot Caroom
NEW YORK - Diesel futures rose for a third day as frigid weather across the U.S. Northeast boosted demand for heating fuel oil-fired power generation with supplies in the New York Harbor area at the lowest level in almost six years.
Prices climbed as colder temperatures will grip most of the eastern United States and Canada through the start of February. The region is expected to have readings about 8 degrees Fahrenheit (4 Celsius) below normal through Feb. 2, said Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Md. ISO New England said oil-fired plants accounted for one-quarter of the region’s power today.
“Utilities are really starting to buy a lot of distillate because of regional natural gas shortages,” Tom Finlon, director of Energy Analytics Group Ltd., said by phone from Jupiter, Fla. “They’re turning to distillate generation, and that’s blowing out prices.”
Ultra-low sulfur diesel fuel for February delivery advanced 5.61 cents, or 1.8 percent, to $3.1326 a gallon at 12:56 p.m. on the New York Mercantile Exchange. Trading volume was 44 percent above the 100-day average.
“We have a lot of winter left,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “When you have weather events, markets can stay in an irrational mode longer than you would expect to be normal because you’ve got emotions trading also.”
Supplies around New York Harbor, the delivery point for futures contracts, slid 6.5 percent to 17 million barrels last week, the least since May 9, 2008, according to Energy Information Administration data. Nationwide, stockpiles slipped 3.21 million barrels to 120.7 million barrels.
The February contract’s premium to March futures widened 2.4 cents to 10.95 cents a gallon, the highest for this day since 2000, indicating concern that available supplies are limited. February diesel and gasoline contracts will expire at the end of trading on Jan. 31.