ULSD Rises Amid Winter Storm, Oil Slips on Output Returns


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- ULSD futures continued to rise Monday (1/26) morning as 
harsh winter weather in the U.S. led to higher diesel fuel and heating oil 
demand. Crude oil and gasoline futures, meanwhile, edged lower after Kazakh oil 
export terminals started to operate at full capacity following a prolonged 
outage.

   The U.S. Dollar Index's tumble to a four-month low of 97.07 against a basket 
of foreign currencies limited the price decline in oil and commodities 
denominated in the greenback.

   NYMEX ULSD futures for February delivery strengthened $0.0727 to a two-month 
high $2.5012 gallon.

   In crude, WTI futures for February delivery fell $0.40 to $60.67 bbl, while 
ICE Brent for March delivery retreated $0.38 to $65.50 bbl.

   Front-month RBOB futures slipped $0.0311 to $1.8199 gallon.

   Freezing temperatures and storms have forced shut some 250,000 bpd of U.S. 
crude oil production since the weekend. These supply losses, however, were 
dwarfed by more permanent production returns elsewhere. Kazakhstan's Black Sea 
loadings returned to full capacity on Sunday, allowing the partial restart of 
production at the country's largest oil field.

   ULSD futures bucked the bearish trend in oil as harsh winter weather gripped 
large parts of the U.S. amid historically tight inventories.

   On the East Coast, where fuel oil remains an important source of heating, 
distillate fuel oil inventories were until last week at multi-year lows and 
remained 14% below the five-year seasonal average, according to Energy 
Information Administration data.

   Diesel fuel demand also jumped as some parts of the country were buried in 
more than a foot of snow.




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