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Heating oil prices moved higher in 1999, as the Organization of Oil Exporting Countries (OPEC) agreed to implement production cuts. When the market recognized that these cuts were being adhered to by the O.P.E.C. countries, prices for all energy products increased. Smaller supplies of petroleum will, in time, translate into smaller supplies of heating oil. Continued strength in the U.S. economy implied that demand for energy products was more likely to increase than to decline. Early in February 1999, No. 2 fuel oil in New York was trading below 30 cents per gallon. By September 1999, the price had exceeded 60 cents per gallon. There is some seasonality in fuel oil production. Petroleum refineries increase production in the summer months, ahead of the winter heating season, to build inventories. One factor that affects the use of heating oil is the weather. Most of the heating oil used in the U.S. is consumed in the northeastern states. The last two years have seen mild winters, greatly reducing the amount of heating oil used by residential customers. The winter of 1999/2000 began mild as well, though by January 2000 more winterlike temperatures had engulfed the region. U.S. distillate fuel oil production in August 1999 was 3.46 million barrels per day. The Energy Information Agency reported that this was some 2 percent less than the previous month. In August 1998, production averaged 3.48 million barrels per day. In the January-August 1999 period, production of distillate fuel oil averaged 3.36 million barrels per day. This was some 3 percent less than in the same period in 1998, and 1 percent more than the like period of 1997. For all of 1998, production averaged 3.42 million barrels per day. In 1990, production averaged 2.93 million barrels while in 1985 it averaged 2.69 million barrels. U.S. imports of distillate fuel oil in August 1999 averaged 172,000 barrels per day. This was 1 percent less than the previous month. In August 1998, imports averaged 181,000 barrels per day. In the January-August 1999 period, imports averaged 214,000 barrels per day, an increase of almost 4 percent from the same period of 1998 and 10 percent less than in the like period of 1997. U.S. exports of distillate fuel oil in August 1999 averaged 166,000 barrels per day. This was some 35 percent more than the previous month. In August 1998, fuel oil exports averaged 150,000 barrels per day. In the first eight months of 1999, heating oil exports averaged 155,000 barrels per day. This was up 12 percent from the same period in 1998, and was 4 percent higher than the like period of 1997. For all of 1998, exports averaged 149,00 barrels per day. In 1990, exports averaged 109,000 barrels per day while in 1985 they averaged 67,000 barrels per day. Product supplied in August 1999 averaged 3.32 million barrels per day, down 3 percent from the previous month. In the first eight months of 1999, product supplied averaged 3.48 million barrels per day. This was about unchanged from the same period in 1998 and almost 3 percent more than the like period of 1997. For all of 1998, product supplied average 3.46 million barrels per day. In 1990, the average was 3.02 million barrels per day while in 1985 it was 2.87 million barrels. U.S. ending stocks of distillate fuel oil at the end of August 1999 were 141 million barrels, up 2 percent from the end of July. At the end of 1998, fuel oil stocks were 156 million barrels. Stocks of low sulfur fuel oil (less than .05 percent) at the end of August 1999 were 68 million barrels. Stocks of high sulfur (greater than .05 percent) fuel oil were 73 million barrels. U.S. production of residual fuel oil in August 1999 averaged 741,000 barrels per day, up 1 percent from the previous month. In the January-August 1999 period, residual fuel oil production averaged 724,000 barrels per day. This was down 6 percent from the same month period in 1998 and 6 percent higher than the like period of 1997. For all of 1998, residual fuel oil production averaged 762,000 barrels per day. In 1990, residual fuel oil production averaged 950,000 barrels per day while in 1985 it averaged 882,000 barrels per day. U.S. imports in August 1999 averaged 219,000 barrels per day. In the January-August 1999 period they averaged 236,000 barrels per day. This was some 15 percent less than in the same period of 1998, but 14 percent more than in the like period of 1997. Futures Markets Heating oil futures and options are traded on the New York Mercantile Exchange (NYMEX). In London, gasoil futures and options are listed on the International Petroleum Exchange (IPE).

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Excerpted from the CRB Commodity Yearbook.