Oil falls 2 percent on glut worries; heating oil up on tight supply

Mon Feb 23, 2015 6:32pm EST
 
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By Barani Krishnan

NEW YORK (Reuters) - Crude oil futures fell more than 2 percent on Monday as investors worried about oversupply and a strong dollar, but heating oil futures jumped 5 percent due to operational problems at major U.S. refineries.

Crude was down for almost the whole trading session, rising briefly after the Financial Times quoted Nigerian Oil Minister Diezani Alison-Madueke as saying the country might call for an OPEC extraordinary meeting in the next six weeks or so if prices fell further.

The market has slid since Friday's data showing a slowdown in the weekly decline in the number of rigs drilling for oil in the United States. The data raised worries that U.S. crude inventories, already at record highs, could swell further.

The largest U.S. refinery strike in 35 years has also been a negative for crude prices.

Heating oil futures rallied for a second straight day, reaching above $2.24 a gallon, the highest in nearly three months, as some of the biggest U.S. East Coast refineries struggled to restore operations after severe cold weather triggered outages. Sub-zero temperatures were expected to sweep through the region late on Monday, raising concerns about adequate heating supplies.

"It's a worry of high supplies with crude and tight supplies with heating oil," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

Benchmark Brent crude settled down $1.32 at $58.90 a barrel

Brent briefly rose, hitting a session high of $60.67, after the comments by the Nigerian minister, Alison-Madueke, who is also OPEC's president. Analysts said the gambit will likely fail without Saudi Arabia's support.   Continued...

 
A general view of the Bashneft-Ufimsky refinery plant (Bashneft - UNPZ) is seen outside Ufa, Bashkortostan, January 29, 2015.  REUTERS/Sergei Karpukhin