NEW YORK — Stocks of heating oil have risen so high that they may push near-term prices down sharply, analysts and oil industry executives said.
The supply situation also threatens to keep the market weak through the winter peak-demand period, they said.
According to the American Petroleum Institute, stocks of distillate fuels, which consist largely of heating oil but include diesel, have risen every week since May 18.
The most recent data, for the week ended June 29, showed that two months before companies begin their traditional build-up of winter fuels, distillate stocks stood at 110 million barrels, up 11 million barrels from a year ago. Analysts said companies traditionally have 120 million barrels in stock at the start of the heating oil season.
“If we continue to see a build, heating oil has to start to come apart,” said Tom Bentz, director of trading at United Energy.
Analysts and industry officials said that only exceptionally high demand could keep prices from falling.
Bentz said, “It’s going to have to be very cold for some time … Unless we see a cutback in production, at the rate we’re going, severe cold weather is going to be the only thing that can save the market.”
A major reason for the high level of heating oil stocks is that low crude prices have encouraged refiners to produce more petroleum products to take advantage of record-high profit margins, supply executives said.
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