U.S. heating oil season kicks off well stocked

Tue Dec 7, 2010 7:15pm GMT

* Northeast stocks 7 pct higher than 5-year average

* Strong refining margins will keep heating oil in stock

* First cold snap to boost heat oil demand 16 pct this wk

* 2010/11 heating season not expected to deviate from norm

By Jeffrey Kerr and Selam Gebrekidan

NEW YORK, Dec 7 (Reuters) - The U.S. Northeast is well supplied with heating oil as the first cold snap grips the world's largest heating oil market, analysts and traders said on Tuesday.

Crack spreads, or the difference between the cost of heating oil and crude oil, look favorable for the production of more of the fuel even as forecasts point to a more-or-less normal winter heating season, they said.

The U.S. Northeast, which is mainly supplied with fuel through the New York Harbor market, has experienced its first bout of winter weather in the 2010-2011 heating season, with snow just north and west of New York City reported.

The U.S. National Weather Service said last week's U.S. heating oil demand was 5 percent below normal, but is expected to increase to 16.1 percent above normal this week on the back of the first major cold snap of the season. [ID:nN07DD]   Continued...

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